Shares of Spotify Technology jumped more than 14% at the market open on Tuesday after the streaming group delivered fourth-quarter earnings that comfortably beat analyst expectations. The strong results were driven by faster user growth and improved profitability.
Spotify reported earnings per share of €4.43 for the quarter, well above the €2.85 forecast by analysts. Revenue reached €4.53 billion, narrowly topping expectations of €4.52 billion and marking a 7% year-on-year increase, or 13% growth on a constant currency basis.
Monthly active users climbed to 751 million, exceeding market forecasts of 745.2 million and representing 11% annual growth. The company added a record 38 million users during the quarter, surpassing its own guidance of 32 million.
In its earnings statement, Spotify said it is entering 2026 with strong momentum and sees the business well positioned to deliver continued growth alongside expanding margins.
Premium subscribers increased by 10% year on year to 290 million, with net additions of 9 million during the quarter. Gross margin improved to 33.1%, up 83 basis points from a year earlier. Operating income rose 47% to €701 million, translating into an operating margin of 15.5%.
Looking ahead, Spotify expects first-quarter 2026 revenue of €4.5 billion, slightly below the consensus estimate of €4.57 billion. However, the company forecasts monthly active users of 759 million, ahead of analyst projections of around 752.5 million.
Spotify also highlighted its growing contribution to the music industry, noting that it paid out more than $11 billion to creators in 2025, the highest annual payout in the company’s history.
Free cash flow totaled €834 million in the quarter, bringing full-year 2025 free cash flow to €2.9 billion. This reflects a strengthening balance sheet, despite currency headwinds that reduced reported revenue growth by roughly 580 basis points.
Commenting on the results, analyst Kannan Venkateshwar at Barclays said the strong quarter and outlook should help ease concerns around margins that had been weighing on the stock. He added that with multiple catalysts ahead, Spotify’s valuation could stabilize after recent declines.
Meanwhile, Jessica Reif Ehrlich of Bank of America said the earnings report should reassure investors. With Spotify shares down nearly 30% year to date, partly due to concerns around artificial intelligence, she noted that the fourth-quarter performance and first-quarter guidance point to solid underlying business momentum. Ehrlich added that expectations had been relatively low, making the positive market reaction unsurprising.
