Spotify Shares Surge 14% as Earnings and user Growth top Expectations
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Spotify shares jumped 14% on Tuesday after the music streaming giant reported a strong quarterly performance, fueled by accelerating user growth, higher profitability and continued expansion across international markets. Investors welcomed the results as a sign that Spotify’s recent price increases, product upgrades and focus on efficiency are translating into improved financial performance.
The Swedish company exceeded Wall Street expectations on earnings and slightly beat revenue forecasts, according to LSEG, while also delivering better-than-expected guidance for user growth.
Earnings beat as profitability strengthens
Spotify reported earnings of 4.43 euros per share, significantly above the 2.74 euros expected by analysts. Net income climbed to 1.17 billion euros, compared with 367 million euros in the same period a year earlier, reflecting operating leverage and improved cost discipline.
Revenue totaled 4.53 billion euros, edging past the 4.52 billion euros consensus estimate. Fourth-quarter revenue rose 7% year over year, supported by growth in both subscriptions and advertising, as well as favorable product mix.
Despite the strong quarter, Spotify warned that foreign exchange headwinds could weigh on near-term results. For the current quarter, the company expects revenue of 4.5 billion euros, citing a 670-basis-point year-over-year drag from currency movements. That forecast fell short of analysts’ expectations of 4.58 billion euros.
User growth accelerates across global markets
Monthly active users increased 11% year over year to 751 million, surpassing the 744.7 million expected by analysts surveyed by FactSet. Paid subscribers rose 10% to 290 million, highlighting continued demand for Spotify’s premium offerings even as the company implemented price increases in select markets.
Spotify attributed the strong user growth to momentum in Latin America, Europe and other international regions, as well as ongoing improvements to its mobile free tier. Ad-supported users climbed to 476 million, beating StreetAccount estimates of 468.9 million, underscoring the platform’s growing appeal among non-paying listeners.
Earlier this month, Spotify raised prices for Premium subscriptions in the U.S., Estonia and Latvia, a move that investors see as a key driver of long-term revenue growth.
New features and engagement drive long-term outlook
During the quarter, Spotify expanded its audiobooks business into new markets and rolled out music videos for premium users, alongside additional artificial intelligence tools aimed at improving discovery and personalization.
The company also highlighted the success of its 2025 “Spotify Wrapped” campaign, which summarizes users’ listening habits at year-end. Spotify said the feature was its most successful ever, with more than 300 million users engaging with Wrapped and generating over 630 million shares across social media platforms.
Looking ahead, Spotify expects monthly active users to grow by 8 million to 759 million, exceeding a FactSet estimate of 752.4 million. The company forecasts total premium subscribers will reach 293 million, signaling confidence in continued user engagement and monetization despite macroeconomic and currency-related challenges.