Spotify’s (SPOT) third-quarter report signals profitability and expanding global reach.
Spotify has delivered another standout quarter, surpassing forecasts on nearly every key metric. The streaming giant continues to build momentum through a mix of subscription growth, strategic partnerships, and expanding content offerings.
Key Points
- Revenue rose 7.1% to €4.27 billion, beating expectations.
- Operating income jumped to €582 million, well above estimates.
- Monthly active users climbed 11% to 713 million, setting a new record.
Expanding Profitability and Global Reach
Spotify’s latest quarter showcased robust performance across core business areas. Premium revenue increased 9% to €3.83 billion, driven by double-digit subscriber growth in regions like Latin America and North America. The company also maintained healthy margins, reporting operating income of €582 million versus a forecast of €499 million.
The growth was fueled by strong user engagement, price adjustments in over 150 markets, and efficient cost management. Operating expenses dropped 2% year over year, aided by lower payroll taxes and currency tailwinds. Even after accounting for higher marketing and personnel costs, the results underscored Spotify’s operational discipline.
The platform’s total user base reached 713 million monthly active users—an 11% increase year over year—reflecting Spotify’s ability to attract and retain listeners worldwide.
How Is Spotify Expanding Beyond Music?
Spotify’s multi-format approach continues to pay off. Beyond music, the company is doubling down on podcasts, audiobooks, and video. Its video podcast catalog has now reached nearly half a million shows, up 54% from last year, with over 390 million users streaming video podcasts.
This surge in video engagement highlights Spotify’s evolving ecosystem. By letting users comment, participate in polls, and interact with creators, the app increasingly resembles a social platform. Moreover, video podcast consumption has jumped 80% since the launch of the Spotify Partner Program, which allows creators to monetize content based on engagement.
Strategic partnerships are also shaping Spotify’s next phase. The company’s recent collaboration with Netflix will allow video podcasts to reach new audiences starting in 2026, reinforcing Spotify’s “creator-first” vision and expanding potential ad revenue streams.
What’s Next for Spotify’s Margins and Growth?
While the company achieved impressive profit gains this quarter, management cautioned that advertising seasonality and small churn from price hikes could temporarily pressure margins. Gross margin for the period stood at 31.6%, slightly ahead of guidance. Spotify expects a similar margin profile in the fourth quarter, with operating income projected to rise to €620 million.
Despite slower ad revenue growth, Spotify remains optimistic about its long-term profitability. CFO Christian Luiga noted that while premium margins face short-term pressure, structural improvements—like better content allocation and cost efficiency—should sustain future gains.
What It Means for Investors
For investors looking to analyze stocks and spot companies that are good to invest in, Spotify’s turnaround story offers an instructive case. After achieving its first full-year profit in 2024, the company has continued to deliver strong earnings, supported by user growth and disciplined cost control.
While some volatility in advertising revenue remains, Spotify’s diverse product mix and push into new media segments could help mitigate cyclical risk. The stock has already gained over 40% this year, reflecting renewed confidence in its long-term potential.
In the broader investment news landscape, Spotify stands out among the best company investments for exposure to the digital entertainment and streaming market. Its steady subscriber growth, new partnerships, and AI-driven personalization tools make it a compelling name for those learning the basics of investing or seeking the best stocks to buy for growth.
Conclusion
Spotify’s solid quarter reinforces its leadership in global audio streaming. With record users, rising profitability, and bold expansion into video and creator monetization, the company appears well-positioned heading into 2026. Investors will be watching closely to see whether its reinvestment plans and continued innovation translate into sustained margin growth and higher long-term returns.
FAQs
How many monthly active users does Spotify have?
Spotify reported 713 million monthly active users, up 11% year over year.
What drove Spotify’s profitability this quarter?
Profit growth came from strong premium subscriber gains, lower costs, and solid user engagement across new content formats like podcasts and video.
How is Spotify expanding beyond music streaming?
The company is investing in podcasts, audiobooks, and video content, partnering with major players like Netflix to reach wider audiences.
What are Spotify’s main challenges?
Spotify faces near-term margin pressure from advertising slowdowns and subscriber churn linked to global price hikes.
Is Spotify a good stock to invest in?
For long-term investors, Spotify’s strong fundamentals, consistent user growth, and diversified business model make it a potentially attractive investment opportunity.
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