Why Your 'Wrapped' Obsession Just Made Spotify Investors Very Rich

Core Insights - Spotify Technology S.A. reported fourth-quarter 2025 results that exceeded Wall Street expectations, with earnings of $5.16 per share compared to the analyst consensus estimate of $2.95 [1] - Revenue reached $5.28 billion (4.53 billion euros), marking a 7% year-over-year increase and surpassing projections of $5.16 billion [1] User Growth - Monthly active users (MAUs) increased by 11% year-over-year to 751 million, with a record addition of 38 million subscribers in the last quarter, exceeding company expectations by 6 million [3] - Premium subscribers rose 10% year-over-year to 290 million, aligning with forecasts and showing broad-based regional gains [3] Revenue and Monetization - Average revenue per user (ARPU) for Premium declined approximately 3% year-over-year to 4.70 euros, while ad-supported revenue decreased by 4% [4] - Despite user growth, monetization trends softened [3] Margins and Operating Income - Spotify achieved an 83-basis-point improvement in gross margin to 33.1%, supported by gains in both Premium and ad-supported segments [5] - Premium gross margin increased to 34.8%, up 10 basis points from the previous year, driven by revenue growth outpacing music costs [5] - Ad-supported gross margin rose 441 basis points to 19.5%, aided by contributions from podcasts and music [6] - Operating income surged 47% year-over-year to 701 million euros, resulting in a 15.5% operating margin [6] Cash Flow and Employment - At the end of the quarter, Spotify held 9.5 billion euros in cash, cash equivalents, restricted cash, and short-term investments, generating 834 million euros in free cash flow during the period [7] - The company reported having 7,323 full-time employees at the end of the quarter [7]