Spotify is riding a wave of optimism into the holiday season, forecasting fourth-quarter profit well above Wall Street’s expectations. The Swedish audio-streaming giant anticipates operating income of euro 481 million ($509.76 million), surpassing analysts’ estimates of euro 445.7 million, thanks to aggressive cost-cutting and steady growth in subscriber numbers.

Spotify’s shares, already having doubled in value this year, rose an additional 7 percent in extended trading following the announcement, Reuters reported.

The company has strategically trimmed expenses over the past year by laying off employees, scaling back on podcasts, and reducing marketing spend. These measures, combined with higher subscription prices in the U.S., have fueled its pathway to profitability.

Spotify’s user growth also supports this trend, with expectations to reach 665 million monthly active users (MAUs) by the end of Q4, above Visible Alpha’s forecast of 661 million. The platform is on track to add 8 million premium subscribers, bringing its total to 260 million, a key milestone for long-awaited profitability.

Spotify’s premium subscribers rose by 12 percent in Q3 to 252 million, just above estimates, while MAUs grew 11 percent to 640 million. However, overall revenue climbed only 19 percent to euro 3.99 billion, missing the euro 4.02 billion forecast. The shortfall was attributed to weak digital advertising demand and a strong dollar, both of which may impact its Q4 revenue forecast of euro 4.1 billion, which remains below the euro 4.26 billion expected by analysts.

Spotify‘s CEO, Daniel Ek, remains optimistic, citing a shift in ad industry trends from brand spending to automation and direct ad spending, areas Spotify is actively investing in. Meanwhile, gross profit surged 40 percent in Q3 to euro 1.24 billion, with gross profit margin rising to 31.1 percent from 29.2 percent in Q2, signaling Spotify’s focus on sustainable growth and efficient cost management.

As Spotify continues to enhance its premium offerings and expand innovative features like AI-generated playlists, it is well-positioned to retain and grow its user base, moving closer to sustained profitability—a milestone investors have eagerly anticipated.