Spotify Premium Subscribers Boost Q3 Revenue, Eyes Strong Holiday Quarter

Anusuya Lahiri

November 04, 2025

Spotify Technology S.A. (NYSE:SPOT) shares gained on Tuesday after the company reported third-quarter 2025 results that exceeded Wall Street expectations.

Spotify posted quarterly earnings of $3.83 per share, surpassing the analyst consensus estimate of a $1.87 profit.

Revenue reached $4.99 billion (4.19 billion euros), up 7% year over year and ahead of projections of $4.92 billion.

Also Read: Spotify Price Hikes And New Deals Could Fuel Big Revenue Gains: JP Morgan

User Growth Accelerates

The quarter showed strong user growth. Monthly active users (MAUs) rose by 17 million to 713 million, outperforming company expectations by 14 million.

Premium subscribers climbed 12% year over year to 281 million, tracking in line with forecasts and showing broad-based regional gains.

Despite this momentum, monetization trends softened. Average revenue per user (ARPU) for Premium slipped 4% year over year to 4.53 euros, while ad-supported revenue declined 6%.

Margins Mixed as Premium ARPU Slides

Spotify delivered a 53-basis-point improvement in gross margin to 31.6%, supported by gains in the Ad-supported segment.

Premium gross margin of 33.2% declined 34 basis points from a year ago. The year-over-year trend was driven by higher video podcast expenses, including costs previously allocated to the Ad-supported segment. This was partially offset by revenue growth that outpaced music costs (net of marketplace programs) and audiobook expenses.

Ad-supported gross margin rose 525 basis points to 18.4%, helped by stronger contributions from podcasts and music.

Operating income increased 28% year over year to 582 million euros, translating to a 13.6% operating margin.

Spotify closed the quarter with 9.1 billion euros in cash and equivalents and generated 806 million euros of free cash flow. The company reported 7,323 full-time employees at the end of the quarter.

Outlook

For the fourth quarter of 2025, Spotify expects revenue of $5.26 billion (4.5 billion euros), above the analyst consensus forecast of 4.56 billion euros.

The company expects total Premium subscribers to reach 289 million, implying the addition of roughly eight million net new subscribers during the quarter.

Total monthly active users (MAUs) are projected to climb to 745 million, reflecting approximately 32 million net new additions.

Price Action: Spotify shares were trading higher by 4.96% to $676.05 premarket at last check Tuesday.

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Photo by Diego Thomazini via Shutterstock

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