Music streaming giant Spotify has reported record profits exceeding €1 billion ($1.1 billion), following a year of cost-cutting measures and workforce reductions, according to BBC. 

Last year, Spotify implemented significant layoffs, reducing its workforce by 17% to control expenses. With a long-term goal of reaching a billion users by 2030, the company has announced plans to ramp up marketing spending to attract new audiences. 

However, Spotify acknowledged that it missed its forecast for monthly active users. Currently, the platform boasts 615 million users, slightly below projections.

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Where Spotify Record Profit Came From

The Swedish company remains committed to expanding its user base, offering access to podcasts and audiobooks. 

Since its inception in 2006, Spotify has invested in expanding its business and securing exclusive content, including podcasts featuring prominent figures like Michelle and Barack Obama and the Duke and Duchess of Sussex.

Now, the surge in profits was largely driven by Spotify's podcast business, with gross margins rising to 27.6% in the quarter. The company invested over a billion euros in its podcasting arm, including increased spending on popular shows like "The Joe Rogan Experience." 

Despite a slight shortfall in user forecasts, Spotify's quarterly revenue surged by 20% to €3.64 billion ($4 billion), surpassing estimates due to its focus on podcasts and audiobooks. The premium subscribers increased by 14% in the first quarter to  239 million. 

Some part of this surge also came from pricing adjustments and new subscription plans to bolster revenue streams. Per VCPost, Spotify included a music-only tier targeting specific consumer preferences. 

Spotify shares initially dipped following the quarterly results but later rebounded, surging 8% in premarket trading.

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