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Spotify Details Long-Term Outlook, AI Music Deals With Universal; Shares Jump

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Spotify Details Long-Term Outlook, AI Music Deals With Universal; Shares Jump

Spotify Technology (SPOT) outlined its long-term financial targets and signed licensing agreements with Universal Music Group for fan-made remixes, sending the audio-streaming platform's shares soaring Thursday.

At its investor day, Spotify detailed its targets through 2030, including delivering a mid-teens revenue compounded annual growth rate, a gross margin between 35% and 40%, and an operating margin above 20%.

The company also affirmed its commitment to its objectives of one billion subscribers, 100 billion euros ($116.27 billion) in revenue and more than 40% in gross margin, with co-Chief Executive Alex Norstrom labeling those goals as Spotify's "north stars."

"The (key performance indicators) we underwrite are centered on engagement, revenue, efficiency, and retention," Chief Financial Officer Christian Luiga said in a statement. "Our bets -- from Audiobooks+ to DJ to Reserved -- have clearly quantified targets tied to those drivers. And it's the way these bets build on each other over time that drives lasting improvements in (lifetime value)."

Under the recorded music and music publishing licensing deals with Universal Music, Spotify will launch a new tool allowing users to create covers and remixes of the songs from artists and songwriters who opt in. The tool is expected to launch as a paid add-on for Spotify premium users, the companies said in a joint statement.

"This groundbreaking tool will be powered by generative (artificial intelligence) technology that will open up additional revenue streams and new ways to drive discovery," Spotify and Universal Music said.

Spotify's New York Stock Exchange-listed shares were up 13% in Thursday late-afternoon trade. The stock has lost nearly 16% in value far this year.

Late last month, the company logged stronger-than-expected first-quarter profit, while its premium subscriber growth and outlook disappointed investors at the time.

Spotify's website shows 761 million users, including 293 million subscribers, across 184 markets globally.

Price: $488.59, Change: $+55.27, Percent Change: +12.76%

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