Spotify Technology (NYSE:SPOT) executives used the company’s fourth-quarter 2025 earnings call to highlight record user additions, continued margin expansion, and an increasingly central role for artificial intelligence in both product development and internal operations. The call also marked a leadership milestone for founder Daniel Ek, who said it was his final earnings call as CEO as he transitions to Executive Chairman.
Leadership transition and long-term framework
Ek opened by reflecting on Spotify’s operating philosophy and offered what he described as a framework for evaluating the business going forward. He pointed to three priorities: solving problems at the intersection of consumers and creators; operating “first and foremost” as a technology company; and playing the long game through decisions designed to compound over time.
Q4 highlights: record MAU adds, Wrapped engagement, and creator payouts
Norström said Spotify closed what management called the “year of accelerated execution” with a quarter in which the company met or exceeded guidance across key metrics and delivered its highest quarter ever for monthly active user (MAU) net additions. He said Spotify now serves “over three-quarters of a billion people” globally.
A key driver of MAU outperformance was Spotify Wrapped. Norström said more than 300 million users engaged with Wrapped, up 20%, and users generated more than 630 million social shares, up 42%. He added that Wrapped day one represented the highest single day of subscriber intake in Spotify’s history.
Management also highlighted Spotify’s contributions to rightsholders and creators. Norström said Spotify paid out more than $11 billion to music rights holders in 2025, which he described as a global record for annual payments from a single source, bringing cumulative payouts since founding to nearly $70 billion.
In podcasting, Norström said video podcast consumption on Spotify has increased by more than 90% since the launch of the Spotify Partner Program. He said the platform now hosts more than 530,000 video podcast shows and noted that a Spotify and The Ringer show won the first-ever Best Podcast award at the Golden Globes.
In audiobooks, Norström said Spotify expanded audiobooks in Premium to additional markets and that leading publishers have credited Spotify with bringing in new listeners and driving double-digit growth in audiobooks.
AI strategy: “agentic” experiences, content creation, and platform differentiation
Söderström spent much of his prepared remarks and Q&A responses on how Spotify is using AI. He argued that disruption typically comes from new technology enabling new business models, and said Spotify believes the dominant consumer model will remain “ads plus subscription,” which he said positions Spotify well.
He cited several AI-driven product initiatives and metrics, including the interactive AI DJ and Prompted Playlist. Söderström said about 90 million subscribers have used AI DJ, driving over 4 billion hours of time spent on Spotify. He described Prompted Playlist as a tool that lets users create playlists via natural-language prompts and rules, tapping listening history and “up-to-the-minute culture pulled from the internet.”
Söderström said Spotify is building a “language-to-music” (and language-to-podcast and language-to-books) dataset that he views as difficult to commoditize because taste is opinion-based rather than factual. He said the company expects this to improve its models over time and help it deliver what he called a more intelligent, interactive media platform.
On AI-generated music, Söderström said Spotify does not disclose what percentage of uploads are AI-generated. He said Spotify does not believe it should decide which creation tools are allowed, but that users may want transparency. He said Spotify is working with the industry to allow creators and labels to add metadata about how music was created so it can be surfaced to listeners, referencing the “About the Song” feature. He also said AI can accelerate “spammy tracks,” adding that Spotify has long invested to curb abuse and views AI-driven spam as a scaling of an existing challenge.
In response to questions about whether AI music tools could become competing distribution platforms, Norström said Spotify provides a scaled distribution and monetization service for rights holders with a “working business model,” and that the company aims to pursue AI opportunities in a way that respects artists. Söderström added that the company sees opportunity in two AI-related categories: net new music and derivative works such as covers or remixes, and said Spotify wants to work with the industry on a rights framework for derivatives.
Financial results and outlook: revenue growth, margins, cash flow, and buybacks
CFO Christian Luiga said fourth-quarter revenue grew 13% year over year on a constant-currency basis to €4.5 billion. Premium revenue rose 14%, driven primarily by subscriber growth. Advertising grew 4%, and Luiga said that excluding the effects of Spotify’s podcast optimization strategies, advertising growth was roughly 7% on a like-for-like basis. He said management expects improved advertising growth in the second half of 2026, citing adoption of new advertising tools.
Gross margin was 33.1%, expanding just over 80 basis points year over year, which Luiga attributed primarily to content cost favorability. Operating income was €701 million, €81 million above forecast; Luiga said social charges contributed a positive €67 million impact due to share price movements, with the remainder driven by gross margin outperformance. Free cash flow was €834 million in Q4, and the company ended the quarter with €9.5 billion in cash and short-term investments.
Luiga said Spotify repurchased $433 million of shares in Q4 and intends to continue opportunistic share buybacks. In the Q&A, he added that Spotify completed €510 million in buybacks during 2025 and noted a €1.5 billion convertible note due in March that the company expects to settle in cash.
For full-year 2025, Luiga said revenue grew 13%, gross profit grew 20%, and operating income increased by more than 50% to deliver a full-year operating margin of 13%. He said free cash flow improved by approximately €600 million to a record €2.9 billion.
Looking to Q1, Spotify forecast 759 million MAUs, up 8 million from Q4, and 293 million subscribers. The company expects €4.5 billion in Q1 revenue, implying approximately 15% growth, and forecast ARPA growth of 5%-6%. Luiga said the outlook incorporates a €35 million currency headwind versus prior-quarter exchange rates. Spotify guided to 32.8% gross margin and €660 million operating income for Q1, and said both gross margin and operating margin are expected to improve in 2026, while quarterly progression could vary based on the timing of investments.
Product expansion: free tier, pricing, and books
Management also addressed funnel improvements and pricing. Luiga said Q1 guidance reflects new pricing implementation and that churn from price increases was in line with expectations. Norström said the company was “really happy” with recent U.S. price increases, describing churn as low and consistent with expectations, and reiterated that pricing is evaluated on a market-by-market basis with an aim to “create more value than price.”
On the company’s enhanced free tier, Norström said Spotify is seeing strong engagement uplifts and cited the initiative as a contributor to Q4’s 38 million user additions. He framed engagement as a leading indicator for user growth and downstream subscriber conversion.
Executives also discussed books, including physical books. Söderström said Spotify is not holding inventory and described physical books, e-books, and audiobooks as part of the same consumer market. He said the company wants to make it easier for users who want both formats, including the ability to buy a physical book and sync reading with listening. Management said Spotify recently launched audiobooks in Premium in additional markets including Sweden, Denmark, Finland, Iceland, and Monaco, and characterized audiobooks as early-stage with significant upside.
Spotify said it plans to outline more of its “year of raising ambition” at an Investor Day scheduled for May 21 in New York.
About Spotify Technology (NYSE:SPOT)
Spotify Technology is a digital audio streaming company best known for its on-demand music service and a growing portfolio of spoken-word content. Founded in Sweden in 2006 by Daniel Ek and Martin Lorentzon and launched commercially in 2008, the company offers a cross-platform app that enables users to discover, stream and organize music, podcasts and other audio. Its primary consumer products include a free, ad-supported tier and a paid Spotify Premium subscription that provides ad-free listening, offline playback and higher-quality audio streams.
