Spotify reported its third‑quarter 2025 results with revenue of €4.27 billion, up 7% year‑over‑year, and operating income of €582 million, a 28% increase. The company’s adjusted earnings per share of $3.83 surpassed the consensus estimate of $1.87, a beat of $1.96 or 105%. Premium subscribers reached 281 million, a 12% rise from the same period last year, while monthly active users climbed to 713 million, exceeding the 710.3 million forecast.
Revenue growth was driven by a 12% rise in premium‑subscription revenue and a modest 1% increase in ad‑supported revenue, offset by a 6% decline in the latter segment. The company’s gross margin expanded to 31.6%, up 50–56 basis points year‑over‑year from 31.1% in Q3 2024, reflecting a higher premium‑mix and disciplined cost controls. Operating income grew in tandem, supported by the margin lift and a 28% rise in revenue, while the company maintained a strong operating margin of 13.6% versus 12.8% in the prior year.
Management highlighted that the earnings beat was largely due to operational leverage and pricing power. Daniel Ek noted that “the business is healthy” and that the company has the tools—pricing, product innovation, and operational leverage—to sustain revenue growth and profit expansion. CFO Christian Luiga added that 2025 is a transition year for the ads business, with expectations of improved growth in the second half of 2026. The company also confirmed that Ek will transition to Executive Chairman in early 2026, with Alex Norström and Gustav Söderström taking on co‑CEO roles.
For the fourth quarter, Spotify guided revenue of €4.5 billion, below the €4.57 billion consensus, and projected 289 million paid users versus the 291 million estimate. The guidance reflects currency headwinds and a more conservative outlook, while the modest decline in premium‑subscriber growth signals a potential slowdown in demand. The company’s focus on cost control and pricing adjustments is intended to offset the weaker outlook and maintain margin expansion.
Analysts responded with mixed outlooks. Some raised their expectations for the company’s long‑term trajectory, citing the strong earnings beat and margin expansion, while others lowered their forecasts in light of the cautious Q4 guidance and the slower premium‑subscriber growth. The overall market reaction was tempered, with investors weighing the robust Q3 performance against the more subdued Q4 outlook.
The content on BeyondSPX is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.