Shares of Spotify climbed over 5% in pre-market trading on Tuesday after the company beat Wall Street expectations for its third quarter, with total revenue growing 7% to €4.3 billion ($4.93 billion), driven by an increase in paid subscribers.
The music streaming giant added 5 million premium subscribers for a total of 281 million. Total monthly active users (MAUs) grew to 713 million, up from 696 million in the previous quarter, while ad-supported MAUs hit 446 million, up from 433 million. The growth was driven by strong quarter-over-quarter and year-over-year growth across all regions, the launch of mobile free tier enhancements globally and successful marketing campaigns in select developing markets.
Premium revenue grew 9% to €3.83 billion ($4.4 billion), reflecting subscriber growth despite a 4% decline in average revenue per user. Excluding the impact of foreign exchange rates, ARPU was boosted by the company’s recent price increase, offset by a shift in product and market mix.
Meanwhile, ad-supported revenue fell 6% to €446 million ($512.5 million). Growth in music and podcast advertising sales, driven by growth in impressions sold, was offset by “softness in pricing and optimization” in its Owned & Licensed portfolio’s podcasting inventory.
Here are the quarter’s results:
Net income: A profit of €899 million, compared to a loss of €86 million a year ago.
Earnings Per Share: €3.28 per share, compared to €2.14 per share expected by analysts surveyed by Yahoo Finance.
Revenue: €4.3 billion, up 7% year over year, compared to €4.23 billion expected by analysts surveyed by Yahoo Finance.
Operating income: €582 million, up 28% year over year
“The business is healthy. We’re shipping faster than ever. And we have the tools we need – pricing, product innovation, operational leverage, and eventually the ads turnaround – to deliver both revenue growth and profit expansion,” Spotify founder and CEO Daniel Ek said in a statement. “It all comes back to user fundamentals and that’s where we are: 700 million users who keep coming back, engagement at all-time highs. We’re building Spotify for the long-term.”
Spotify adds losless audio, in-app messaging, ChatGPT
During the quarter, Spotify launched 30 new features and updates for both free and premium users, including lossless audio to premium users in 50 markets and a beta for a new mixing tools feature that allows users to add and customize transitions to tracks to create unique playlists.
It also rolled out a Messages feature to free and premium users ages 16 and older in select markets on mobile, allowing them to keep track of recommendations and share their favorite music, podcasts and audiobooks with friends and family. Almost 25 million users have sent nearly 200 million messages since the feature’s initial launch.
Additionally, Spotify launched an integration with ChatGPT, which has rolled out across more than 2,000 devices, allowing users to receive personalized music and podcast recommendations.
Other highlights during the quarter include Spotify’s English language catalog of audiobooks tripling from 150,000 to over 500,000 titles since launching in premium two years ago, with the number of people listening to an audiobook on the platform up 36% year over year; its Jams feature hitting 100 million monthly listening hours, with over 200 million users sharing content monthly; and Taylor Swift’s “The Life of a Showgirl” becoming Spotify’s most-streamed album in a single day and the most pre-saved ever.
Spotify executives talk Netflix video podcast partnership, price increases
The latest quarterly results come as Ek will transition to the role of executive chairman. The streaming giant has switched to a co-CEO structure with current co-presidents Alex Norström and Gustav Söderström set to serve in the roles starting Jan. 1. It also comes as a selection of sports, culture, lifestyle and true crime video podcasts from Spotify Studios and The Ringer are set to debut on Netflix in the U.S. starting in early 2026, with other market to follow.
“We want our creators to grow and scale their audiences around the world, and in turn, this also opens up an interesting monetization opportunity for Spotify,” Norström told analysts on Spotify’s third quarter earnings call. “This partnership extends our ecosystem, building new fans and serving up just wider distribution channels.”
More than 390 million users have streamed a video podcast on Spotify, a 54% increase year over year, and the company has nearly 500,000 video podcast shows on its platform. Time spent with video content has also doubled year over year, driven primarily by video podcasts, and consumption has increased more than 80% since the launch of Spotify’s Partner Program.
“This is a choice for creators. We don’t decide for them where they want to be. They can be on Spotify and any other platform, but now we can offer the creators the opportunity to be on Spotify, but also get distribution on Netflix, which is ultimately very good for podcasters, and it also gives us revenue opportunities,” Söderström added. “It’s part of our ubiquity strategy and it’s really important that while we build a good user experience, we also need to have a very strong creator offering. This severely strengthens our creator offering, which is why we’re seeing this growth where more and more creators want to be on Spotify with their video.”
When asked about future price increases, Spotify executives said they take factors like household income and the maturity of each market into account.
“The important thing for us is just keep continuing to improve the value to price ratio, meaning raising value and relentlessly just build the best product out there, the best product always win,” Norström said. “And then when we look at our product and the value that reflects, we will then take steps to understand if we need to adjust the price or not.”
Looking ahead, Spotify expects to add 32 million monthly active users for a total of 745 million and 8 million premium subscribers for a total of 282 million in the fourth quarter. It is also forecasting revenue of €4.5 billion and operating income of €620 million. Executives said 2025 would continue to be a transition year for the ads business, with growth expected to improve in the back half of 2026.
Spotify shares are up 70% in the past year, 40% year to date and 1% in the past six months.
