Spotify said it added more net new subscribers than projected in the third quarter, helping drive double-digit increases in revenue and operating income and offset roughly 1 billion euros ($1.1 billion) in operating expenses.
Total revenue rose 14% in constant currency, an accounting method that strips out the effects of foreign exchange rate fluctuations, for a total of 4.97 billion euros ($5.63 billion) in the third quarter ending Sept. 30. With 6 million net new premium subscribers in the quarter — 1 million ahead of earlier guidance and bringing the overall total to 306 million — revenue from paying users rose 15% from a year ago to 4.5 billion euros ($5.08 billion).
Monthly active users (MAUS) grew in line with guidance, rising by 11% from last year to 788 million users worldwide, as the company’s multi-quarter rebuild of its advertising tech stack began to show green shoots. Ad-supported revenue rose 9% in constant currency from a year ago to 482 million euros ($546 million).
“This was a quarter where we did what we said,” Alex Norström, Spotify’s co-CEO, said in a statement. “We’ve built a strong business that keeps compounding, we invest when we see a path for growth [and] our costs are moderating. We also have the most passionate and engaged music, podcast and book fans in the world on our platform. That’s why we continue to grow and take share.”
Operating income rose 12% in constant currency to 672 million euros ($761 million), and gross margin expanded by 136 basis points to 33% compared to a year ago, driven by improvement across the premium and ad-supported businesses. The gross margin for the premium segment was 34.5%, while the ad-supported segment’s gross margin was 18.7%, up by 130 and 105 basis points, respectively.
The company’s operating margin in the third quarter was 13.5%, edging lower compared to 13.7% a year ago and 13.6% the prior quarter. As a streaming service, Spotify spends well over half of every dollar on content costs; in 2025, the company paid out more than $11 billion to the music industry. Operating margin is one measure of the operational leverage the company’s executives can drive elsewhere in the business.
Operating expenses rose by about 26% in the third quarter from a year ago to 967 million euros ($1.1 billion), or 19% when Spotify accounts in constant currency and strips out payroll taxes related to its employees’ share-based compensation, which it calls social charges. Spotify reported social charges of 22 million euros ($24.9 million), 13 million euros ($14.7 million) more than it expected. The remaining operating expenses are “driven by temporarily elevated growth in marketing and cloud/AI spend,” the company said. Operating expenses as a percentage of total revenue came in at 19%, and though it ticked up slightly in the third quarter, this metric has been trending downward since late 2023.
In the fourth quarter, the company said it expects MAUs to rise by 30 million net new additions to 818 million, and net new premium subscribers to rise by 10 million for a total of 316 million. Spotify expects 5.2 billion euros in fourth-quarter revenue and 820 million euros ($929 million) in operating income for a gross margin of 33.8%.
Spotify’s executives will discuss the company’s third-quarter earnings with analysts and investors beginning at 8 a.m. ET. Ahead of that call, here are the highlights:
- Premium Subscribers grew 9% year-over-year to 306 million
- Premium Average Revenue per User (ARPU) rose 7.5% year-over-year to 4.95 euros
- Monthly Active Users (MAUS) rose by 11% year-over-year to 788 million
- Total Revenue increased 14% year-over-year in constant currency to 5.0 billion euros
- Gross Margin improved by 136 basis points year-over-year to 33.0%
- Operating Income reached 672 million euros
