Spotify is increasing volume to achieve record profits

Music streaming giant Spotify has reported record profits of more than €1bn (£860m) after a year of cost cuts and layoffs.

The Swedish company has been growing its user base for years, offering subscribers access to podcasts and audiobooks.

But its overall quarterly revenue came at the cost of unexpected monthly active users.

Last year, it cut 17% of its workforce in a cost-cutting move.

Spotify CEO Daniel Ek said last December that about 1,500 jobs would be cut as part of “substantial measures to reduce our costs” so the company can achieve its goals.

But the tech company has been on a mission to expand worldwide and reach 1 billion users by 2030.

It announced on Tuesday that the mission would begin again in earnest, with money spent on winning new audiences.

“We will add some marketing spending throughout the year,” Eck said. “Because we want to continue to grow and we've seen that in some areas, we may have pulled back too much.”

A large portion of Spotify's profits were driven by its podcast business. Gross margins rose to 27.6% in the quarter, compared to 25.2% a year earlier.

It has invested more than €1 billion to build its podcast business, including spending hundreds of millions on popular shows like “The Joe Rogan Experience.”

“He. She [podcasting] The raffle was last year. “It has now become another profit center for us,” Mr Ek said.

The company's quarterly revenue rose 20% to 3.64 billion euros, beating estimates of 3.61 billion euros.

Spotify has been raising prices to increase revenue and experimenting with different subscription plans.

The streaming service will also offer a music-only level “for those consumers who only care about the music aspect,” the company's CEO said.

Spotify currently has 615 million users, which is below its own forecast of 618 million for the quarter. It aims to have 631 million by mid-year.

However, the number of premium subscribers rose 14% in the first quarter to 239 million, in line with estimates.

Spotify shares, which initially fell on the quarter's results, reversed course to rise 8% in premarket trading on Tuesday.

Since its launch in 2006, Spotify has invested a huge amount of money in growing its business and in securing exclusive content.

Podcasts created by Michelle and Barack Obama, as well as the Duke and Duchess of Sussex, have all appeared on the platform.

The deal with Harry and Meghan cost $25 million (£19.7 million) and saw just 12 episodes delivered over two-and-a-half years before the deal expired last June.