As the company prepares for a leadership transition in early 2026, Spotify’s third-quarter earnings show the audio streaming giant riding subscriber momentum but facing mounting pressure to grow its advertising business in a parallel of challenges faced by radio.
Founder and CEO Daniel Ek reported €4.27 billion in revenue for Q3, up 12% year over year on a constant-currency basis.
He told investors the quarter reflected the company’s focus on user growth and long-term value rather than short-term results. He said Spotify’s multi-format strategy across music, podcasts, video, and audiobooks “is working exactly as we hoped,” adding that partner licensing deals continue to strengthen the company’s ability to innovate and achieve long-term financial goals.
Ek will move into the role of Executive Chairman on January 1, with Co-Presidents Alex Norström and Gustav Söderström becoming co-CEOs.
Premium revenue rose 13%, while ad-supported revenue remained flat as the company continued its programmatic transformation. Monthly active users increased by 17 million to 713 million, and paid subscribers rose by 5 million to 281 million.
Norström credited user growth to an enhanced free experience rollout, which brought “millions of new listeners into the Spotify ecosystem.” He noted strong retention following price increases across more than 150 markets and ongoing market-share gains globally. The company’s content divisions—music, podcasts, and audiobooks—all showed expansion, with audiobooks up 36% year over year and video podcast consumption more than doubling.
Ad-supported revenue totaled €446 million, flat year-over-year on a constant currency basis, a data point that stood out to Madison & Wall analyst Brian Wieser. When adjusting for the optimization of licensed podcasts and the rollout of Spotify’s new Partner Program, advertising revenue growth landed in the mid-single digits.
Wieser noted that management has labeled 2025 a “transition year” for Spotify’s ad business, with improvements expected in the latter half of 2026. That projection aligns with broader optimism for audio-on-demand advertising, even as premium subscriber growth continues to drive Spotify’s core performance. Ad-supported users grew 11% year-over-year in Q3, while premium subscribers rose 12%.
Still, the imbalance remains stark. Ad-supported listeners account for 63% of Spotify’s total audience but generate just 10% of its overall revenue, underscoring the challenge of balancing scale with profitability in the platform’s next phase.
CFO Christian Luiga told investors that advertising growth will remain limited through 2025 as Spotify transitions its ad sales model to automated systems, but he forecast improvement in the second half of 2026.
Söderström said Spotify’s “year of accelerated execution” led to more than 30 new features shipped in recent months. These include upgrades to its free tier, the rollout of lossless audio for Premium users, and AI-driven personalization tools. Spotify also unveiled integrations with ChatGPT and Meta’s Ray-Ban smart glasses, which Söderström said further the company’s “ubiquity strategy” to meet users wherever they consume content.
Looking ahead to Q4, Spotify projects 745 million monthly active users and 289 million subscribers, with total revenue of €4.5 billion and a 32.9% gross margin. Luiga said the company expects “another year of healthy revenue growth, disciplined reinvestments, and margin and cash flow improvement” in 2026.
With reporting by Adam R. Jacobson
