Spotify set to report earnings as investors weigh profit margin pressures and potential US price hike

Core Viewpoint - Spotify is preparing to report its third quarter results, with investors focusing on improving profitability amidst cost pressures from new music-label deals [1][2] Group 1: Stock Performance and Market Expectations - Spotify's stock has increased approximately 70% over the past year, influenced by price hikes, a streamlined cost structure, and optimism regarding AI-driven product innovations [1][5] - The stock is currently trading near $650, down from a record closing high of about $775 earlier this year [1] - Following a disappointing second quarter, where Spotify reported a quarterly loss and missed revenue expectations, shares fell nearly 12% [2] Group 2: Leadership Transition - CEO Daniel Ek will step down at the end of the year, transitioning to executive chairman in January 2026, while Gustav Söderström and Alex Norström will take over as co-CEOs [3][4] - Wall Street has reacted positively to the leadership change, viewing it as a sign of continuity [4] Group 3: Financial Performance and Guidance - Spotify's revenue for the upcoming report is expected to be 4.23 billion euros, compared to 3.99 billion euros last year, aligning with the company's guidance of 4.2 billion euros [7] - Adjusted earnings per share (EPS) are projected at 2.00 euros, up from 1.45 euros last year [7] - Monthly active users (MAUs) are expected to reach 711 million, an increase from 640 million last year, while premium subscribers are anticipated to grow to 281 million from 252 million [7] - The gross margin is expected to remain flat year over year at 31.1%, consistent with Spotify's guidance [7]