Spotify Q4 2025 Earnings: Record Users, Massive Profit Beat

Spotify just reported Q4 2025 earnings, and this is a blowout quarter. The company hit 751 million monthly active users — its biggest quarter for new additions ever — and profits came in more than 55% above what analysts expected.

Here's what happened.

The Numbers: A Beat Across the Board

• Revenue: €4.53 billion (up 13% year-over-year on a constant currency basis), slightly above the €4.52 billion analysts expected
• EPS: €4.43 vs €2.85 expected — a massive beat
• Net income: €1.17 billion, more than triple the €367 million from the same quarter last year
• Gross margin: 33.1%, up from 32.3% a year ago
• Operating income: €701 million, beating guidance by €81 million

Translation: Spotify made three times more profit than it did a year ago, and way more than anyone predicted. The company has gone from barely breaking even to generating serious cash.

Subscriptions: The Engine That Keeps Growing

Subscription revenue grew 8% to €4.01 billion. Paid subscribers hit 290 million, up 10% from a year ago — that's 9 million new paying customers added in a single quarter.

A big driver was Spotify Wrapped, the annual year-in-review feature. Over 300 million users engaged with it, generating 630 million social media shares. The first day of Wrapped was Spotify's biggest single day for new subscriber sign-ups in its history.

Translation: Wrapped isn't just a marketing stunt — it's become one of the most effective customer acquisition tools in tech. Hundreds of millions of people sharing their listening stats is free advertising at massive scale.

Spotify has also been raising prices — this is the third US price hike in three years — and subscribers aren't leaving. Churn remains at all-time lows.

Advertising: The Weak Spot

Ad-supported revenue declined 4% year-over-year on a reported basis, though on a constant currency basis it was up 4%.

This is the part of the business that's lagging. Spotify is currently rebuilding its entire advertising platform from scratch — moving off a third-party system to build its own. That's a short-term hit to revenue, but the bet is that owning the ad stack will unlock better targeting and higher prices down the line.

Translation: Spotify is taking a step back on ads to take two steps forward. The new platform isn't finished yet, so ad revenue is soft. Management says the turnaround should show up in the second half of 2026.

Users: 751 Million and Counting

Total monthly active users reached 751 million, up 11% from a year ago. Spotify added 38 million MAUs in Q4 alone — more than any quarter in the company's history.

To put this in context, Spotify says only about 3.5% of the world's population currently subscribes. They believe they can get to 10% or even 15% over time.

Translation: Most of the planet still doesn't pay for Spotify. If the product keeps improving and prices stay reasonable, there's a long runway for growth.

New Bets: Books, Video, and AI

Spotify is pushing well beyond music:

Music videos are now in beta for Premium users across 111 countries, putting Spotify in more direct competition with YouTube.

Audiobooks continue to expand. A new feature called Page Match lets you scan a page of a physical book and pick up the audiobook at the exact same spot. Later this spring, US and UK users will be able to buy physical books through the app via a partnership with Bookshop.org.

AI features include Prompted Playlist, where you describe what you want to hear in plain English and Spotify builds a playlist for you. The company launched over 50 new features in 2025 and views AI as "another macro change that presents an opportunity rather than a headwind."

Spotify also has new leadership — Daniel Ek stepped back from CEO to Executive Chairman at the start of 2026, replaced by two co-CEOs: Gustav Söderström (product and tech) and Alex Norström (business). They're calling 2026 the "Year of Raising Ambition."

What's Coming in 2026

For Q1 2026, Spotify is guiding for:

• Revenue: €4.5 billion (about 15% growth year-over-year)
• MAUs: 759 million
• Subscribers: 293 million
• Gross margin: 32.8%
• Operating income: €660 million

For the full year, Spotify expects both gross margin and operating margin to improve, with free cash flow "meaningfully exceeding" 2025 levels. In 2025, Spotify generated €2.9 billion in free cash flow — a record.

Translation: Spotify isn't just growing revenue — it's keeping more of each euro it earns. That's the sign of a maturing business.

The Bottom Line for Investors

The bull case: Spotify has transformed from a money-losing music app into a genuine profit machine. Revenue is growing at a double-digit clip, margins are expanding, 751 million people use it every month, and the company paid $11 billion to the music industry in 2025 — the largest annual payment from any single source in history. If Spotify can convert even a small fraction of its free users to paid, and fix the ad business, there's significant upside.

The bear case: The ad platform rebuild is still unproven, and management has been guiding to an ad recovery "in the second half" for a while now. Price increases can't continue forever without risking churn. And the new co-CEO structure is untested — Ek built this company, and stepping back introduces leadership risk.

The key question: can Spotify keep growing subscribers while raising prices and expanding into books, video, and AI — without losing focus on what made it essential in the first place?

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References

• Spotify Q4 2025 Earnings Press Release — Spotify Newsroom (Official)
• Spotify Q4 2025 Shareholder Deck — Spotify Investor Relations (Official)
• Spotify Q4 2025 Earnings Coverage — CNBC