Spotify projects first full year of profitability ever

• "We believe we are in a new reality where we are a profitable company. I know a lot of people always doubted us but we always knew we could but it was time to prove we could as well," Ek said.
• CFO Christian Luiga said, "We see positive cash flow going forward and growing."

The big picture: Spotify's road to profitability has been a long time coming. The company's investments in new product areas, particularly podcasts during the COVID era, took years to pay off, at times frustrating investors.

• Ek said moving forward, Spotify will be more disciplined about how it spends money. "You should not expect that we're going to go back to 2021 behavior. We want to be very resourceful," he said.
• Case-in-point: The company's current audiobook push isn't expected to weigh on costs as much upfront, Ek told Axios earlier this year.

By the numbers: Spotify reported a record high gross margin and gross profit for the third quarter on Tuesday, a testament to its cost-cutting efforts and push to grow paid memberships.

• The company's gross margin reached 31.1%, the first time the company's gross profit margin ever surpassed 30% in a quarter and well ahead of the the 2025 deadline it gave investors last year.
• The Swedish tech giant's gross profit surpassed €1 billion for the second quarter in a row. Its operating income hit a record high of €454 million for the quarter.
• The company's core growth metrics also surpassed analyst expectations. Monthly active user growth accelerated 11% year-over-year to 640 million globally. Its paid subscriber count jumped 12% year-over-year to 252 million. (For context, Netflix has 282 million subscribers globally.)

Zoom out: Record profits are starting to drive a significant boost in free cash flow, which Ek said will be used to fuel investments in artificial intelligence.

• "You should expect us to not sit here idly when this opportunity presents itself but actually go and take the opportunity to really reimagine what Spotify can look like as an AI-first company," Ek said.
• "Everything we're doing can be augmented and can ultimately create a much stronger value proposition for our consumers with the help of AI," he added.
• While some AI investments will be used to more efficiently power back-end operations, others will be used to fuel entirely new consumer products, such as Spotify's AI DJ feature launched last year.

Between the lines: Ek said he's particularly excited about ways AI can drive smaller, incremental product changes that can make the platform more interactive and user-friendly, like automating better playlists and fueling better recommendations.

• "This is probably the most excited I've been since I started in technology over 20 years ago," Ek said.

What to watch: Spotify is hosting a video event in Los Angeles Wednesday where it's expected to make new announcements about its investments in video.

Go deeper: Spotify launches viral "daylist" feature globally