Spotify Q3 2025 Earnings Report: Strong Growth, Cautious Outlook

Key Highlights

• Monthly Active Users (MAUs): 713 million, up 11% YoY and 2% QoQ.

• Premium Subscribers: 281 million, up 12% YoY.

• Total Revenue: €4.27 billion, up 7% YoY (or 12% in constant currency).

• Operating Income: €582 million, up 28% YoY.

• Ad-Supported Revenue: €446 million, down 6% YoY.

Notable Metrics

• Gross Margin: 31.6%, improved by 53 basis points YoY.

• Free Cash Flow: €806 million—Spotify's strongest Q3 FCF ever.

• Cash & Short-Term Investments: €9.1 billion as of quarter-end.

Product Updates

Spotify launched several new features in Q3:

• Lossless Audio,

• Playlist Mixing Tools,

• In-app Messaging,

• and ChatGPT integration for music/podcast recommendations.

Forward Guidance (Q4 2025)

• Revenue: Expected at €4.5 billion.

• Premium Subs Forecast: 289 million (↑8M).

• MAUs Forecast: 745 million (↑32M).

• Gross Margin Target: ~32.9%.

• FX Headwinds: Estimated 620 basis points impact on YoY growth.

Analyst Takeaway

Despite strong subscriber growth and improved profitability, Spotify's conservative Q4 outlook caused some investor hesitation. Ad revenue continues to be a weak spot, and FX headwinds remain a drag. However, robust user engagement and product innovation provide a solid foundation for future growth.