06:31 AM EST, 11/13/2024 (MT Newswires) -- Spotify Technology ( SPOT ) gained more premium subscribers than expected in the third quarter, pushing its stock higher early Wednesday even as financial results for the period fell short of Wall Street's estimates.

The audio streaming company posted net income of 1.45 euros ($1.54) a share for the September quarter, advancing from 0.33 euro the year before, it said late Tuesday. The consensus on Capital IQ was for per-share earnings of 1.67 euros. Revenue climbed 19% to 3.99 billion euros, but trailed the Street's view for 4.03 billion euros.

Premium revenue jumped 21% to 3.52 billion euros led by average revenue per user growth and a 12% annual increase in premium subscribers to 252 million, which topped the 251.2 million estimate on Visible Alpha. The company added 6 million more premium subscribers from the previous quarter. Ad-supported revenue improved 6% to 472 million euros.

Spotify's ( SPOT ) New York Stock Exchange-listed shares increased more than 7% in Wednesday's premarket activity.

Total monthly active users, or MAUs, rose 11% to 640 million, reflecting growth across all regions. The MAU count surpassed the company's own guidance by 1 million, while the consensus on Visible Alpha was for 639.3 million.

"We are on track for our first full year of profitability," Chief Executive Daniel Ek said in prepared remarks. "We outperformed on both (subscriber) and MAU, revenues were in line and we had significant beats on gross margin and operating income."

Gross margin expanded by 473 basis points to 31.1% in the most quarter, mainly due to "content cost favorability," according to Chief Financial Officer Christian Luiga. Operating expenses contracted to 786 million euros from 853 million euros in the 2023 period, aided by currency movements and lower personnel costs and marketing spend.

For the ongoing quarter, the music streamer anticipates revenue of 4.1 billion euros, including a foreign-exchange headwind of about 350 basis points. The Street is looking for 4.17 billion euros. The company expects to add roughly 25 million net new monthly active users in the fourth quarter to bring total MAUs to 665 million and about 8 million premium subscribers to bring its total to 260 million. The consensus on Visible Alpha is for 662.1 million MAUs and 260 million subscribers.

"With respect to subscriber net additions -- the very low levels of churn that we expect in the six markets where we've recently announced price increases, is also incorporated into our (fourth-quarter) outlook," Luiga said. "Although new pricing will contribute towards (average revenue per user) growth in (the fourth quarter), overall, we anticipate the lapping of 2023's price increases in 63 markets will lead to an approximately 400 basis point moderation of (year on year) ARPU growth on a constant currency basis in our revenue outlook."