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Spotify Technology SA (NYSE:SPOT) shares rose on Tuesday after the company reported fourth-quarter 2025 results that beat Wall Street expectations.
Spotify posted quarterly earnings of $5.16 per share, beating the analyst consensus estimate of a profit of $2.95.
Revenue reached $5.28 billion (€4.53 billion), up 7% year-on-year and ahead of projections of $5.16 billion.
That growth was largely driven by the company’s successful “Wrapped” campaign, which encouraged users to share their most played artists and songs on social media, as well as the global rollout of an enhanced free tier, Bloomberg reported Tuesday.
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The quarter showed strong user growth. Monthly active users (MAU) rose 11% year over year to 751 million, adding a record 38 million subscribers in the last quarter, beating the company’s expectations by 6 million.
Premium subscribers rose 10% on the year to 290 million, tracking in line with forecasts and showing overall regional gains.
Despite this boost, monetization trends softened.
Average revenue per user (ARPU) for Premium fell by ~3% year-on-year to €4.70, while advertising revenue decreased by 4%.
Spotify delivered an 83 basis point improvement in gross margin to 33.1%, supported by gains in the Premium and Ad-supported segment.
Gross premium margin of 34.8% was up 10 basis points from a year ago. The trend was driven by revenue growth that exceeded music costs net of market program and audiobook costs, largely offset by video podcast costs.
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Ad-supported gross margin increased 441 basis points to 19.5%, helped by stronger contributions from podcasts and music.
Operating profit increased by 47% year-on-year to 701 million euros, which translates into an operating margin of 15.5%.
Spotify ended the quarter with €9.5 billion in cash, cash equivalents, restricted cash and short-term investments, and generated €834 million in free cash flow during the period.
The company reported 7,323 full-time employees at the end of the quarter.
