Spotify ended 2025 on a strong note, reporting steady revenue growth and a sharp jump in profitability for the fourth quarter, driven by higher margins, pricing actions, and disciplined cost control.
The company also shared a confident outlook for early 2026, underlining its focus on profitable growth rather than chasing scale at any cost.
Revenue grows steadily in Q4
For the quarter ended December 31, 2025, Spotify reported revenue of €4.53 billion, an increase of about 7% year over year.
The revenue growth was supported by:
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Subscription price increases in several key markets
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Continued growth in premium subscribers
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Better monetization of ad-supported users
While top line growth was more moderate compared to earlier periods, management emphasized that the quality of growth has improved significantly.
Profitability jumps sharply
Spotify delivered a strong improvement in earnings during the quarter:
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Net income (GAAP): €1.17 billion, up sharply from €367 million a year ago
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EPS (GAAP): €4.43, compared with €1.76 in Q4 2024
Key profitability metrics improved meaningfully:
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Operating income: €701 million
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Operating margin: 15.5%
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Free cash flow: €834 million
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Management attributed the margin expansion to better cost discipline, higher gross margins, and improved operating leverage as the business scales.
User base continues to expand
Spotify continued to grow its global audience during the quarter:
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Monthly Active Users (MAUs): 751 million, up 11% year over year
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Premium subscribers: 290 million, up 10%
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Ad-supported MAUs: 476 million, up 12%
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User engagement remained strong during the holiday season, supported by new features and the company’s annual “Wrapped” campaign.
Management commentary: focus on profitable growth
Management said Q4 marked another step forward in Spotify’s shift toward sustainable and profitable growth.
Leadership highlighted that recent pricing actions, combined with improved efficiency across content costs, marketing, and overheads, are now clearly showing up in margins and cash flow. The company noted that it is becoming more selective in how it invests, prioritizing initiatives with clearer returns.
Spotify also emphasized that it sees significant long-term opportunity in:
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Expanding its advertising platform
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Improving personalization through AI-driven features
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Growing newer formats such as audiobooks and video
Management reiterated that the company’s strategy is not just to grow users, but to monetize engagement better over time, while maintaining a strong balance between investments and profitability.
Outlook: solid start expected for 2026
For the first quarter of 2026, Spotify guided to continued momentum:
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Revenue: ~€4.5 billion
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MAUs: ~759 million
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Premium subscribers: ~293 million
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Gross margin: ~32.8%
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Operating income: ~€660 million
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The company said it remains confident in its ability to expand margins further while continuing to invest in product innovation and content.
Bottom line
Spotify’s Q4 2025 results underline a business that is growing more profitably. While revenue growth has moderated, sharp gains in net income, margins, and free cash flow show improving execution. With steady user growth and a confident outlook, Spotify enters 2026 with strong momentum.
To view the company’s previous earnings and latest concall transcripts, click here to visit the Alphastreet news channel.