- Spotify added a record 38 million users last quarter, reaching 751 million total users
- The growth was driven by the Wrapped campaign and enhanced free tier worldwide
- Spotify's operating income hit €701 million, surpassing estimates and setting a gross margin record
Spotify Technology SA, the Swedish music streaming giant, added a record number of users last quarter, far surpassing Wall Street analyst expectations.
The world's biggest streaming service added 38 million users from October through December to reach 751 million, according to a statement Tuesday. That beat the average analyst forecast for 745.2 million.
The company credited its end-of-year “Wrapped” campaign, which lets users share their favorite artists and songs on social media. Spotify also cited the launch of an enhanced free tier around the world as contributing to the growth.
Spotify shares rose as much as 15% in early trading in New York on Tuesday. Spotify shares had slumped 28% so far this year, compared with a 1.7% gain in the S&P Index.
Operating income was €701 million ($835 million), compared with estimates for €639.1 million. Gross margin, typically an important indicator for Spotify investors who are looking for the company to steadily improve profitability, increased to 33.1%, also a record. Revenue from ads, a part of the business that has struggled to grow, shrunk year over year and was down by 4%.
The company also issued first-quarter guidance for 759 million total monthly active users, a number that exceeds analysts' forecasts. Spotify projects that revenue will be unchanged at €4.5 billion due to foreign exchange rate movements.
The solid earnings beat is an early win for Gustav Söderström and Alex Norström, who took the helm at the company as co-chief executive officers at the beginning of the year from long-time leader and co-founder Daniel Ek. Over the past two decades, Spotify has expanded from music streaming to incorporate podcasts, audiobooks, video and now physical books as it seeks to become a broad-based entertainment hub.
“It's incredible to think that we now serve over three quarters of a billion people around the world,” said Norström in prepared remarks. “We were founded to solve what felt like the impossible, and ambition has been the driving force behind our success from our earliest days. And ambition will be a guiding principle of our next chapter.”
In recent months, the company has introduced features that aim to give users more control over the platform, including editorial tools for people who want to curate their listening experience.
One new tool, called prompted playlist, uses artificial intelligence to turn text prompts describing the type of music an individual wants to hear into a playlist, pulling from online context and the person's historical preferences. Spotify also introduced music videos to the service in the US, and last week was among the few platforms to premiere the latest one from Taylor Swift. The company paid more than $11 billion to music rightsholders in 2025, an increase of more than 10% from 2024.
Last month, the company also announced price increases for users in the US, bringing the cost of a single subscription up by a dollar to $13 a month. Investors have encouraged Spotify to continue increasing prices in markets where growth has slowed. But after a series of price hikes by several popular streaming platforms in recent years, some analysts are concerned there won't be room for more.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.