Spotify Technology (SPOT) Q3 2025 earnings summary

Executive summary

• Surpassed 713 million monthly active users (MAU) and 281 million Premium subscribers, both up 11–12% year-over-year, with robust engagement and strong user growth across all regions.

• Revenue, gross margin, and operating income all exceeded expectations, driven by Premium segment growth, cost efficiencies, and product innovation.

• Net income for Q3 2025 reached €899 million, up from €300 million a year ago, and Free Cash Flow hit a Q3 record of €806 million.

• Leadership transition announced: Daniel Ek to become Executive Chairman in January, with Alex Norström and Gustav Söderström as co-CEOs.

• Launched 30+ product updates, expanded partnerships, and integrated with ChatGPT to enhance user engagement and advertiser reach.

Financial highlights

• Q3 2025 revenue was €4.3 billion, up 7% year-over-year (12% on constant currency basis), with Premium revenue up 9% and Ad-Supported revenue down 6%.

• Gross margin improved to 31.6–32%, up 50–53 bps year-over-year; Premium gross margin at 33%, Ad-Supported at 18.4%.

• Operating income was €582 million, a 28% year-over-year increase, and net income reached €899 million.

• Free Cash Flow for Q3 was €806 million, with trailing 12-month Free Cash Flow at €2.9 billion and nine-month Free Cash Flow at €2,040 million.

• Cash and short-term investments at quarter-end were €9.1 billion.

Outlook and guidance

• Q4 guidance: 745 million MAU (+32 million), 289 million Premium subscribers (+8 million), €4.5 billion revenue (+13% YoY), gross margin of 32.9%, and operating income of €620 million.

• ARPU expected to grow 2% year-over-year on a constant currency basis; Premium ARPU for Q3 was €4.53, down 4% year-over-year.

• Management expects continued growth in Premium Subscribers and MAUs, with ongoing investments in product enhancements and content.

• Guidance assumes a 620 bps FX headwind to revenue growth year-over-year.

• 2026 expected to see healthy revenue growth, disciplined reinvestment, and margin and cash flow improvement.