Financial Data and Key Metrics Changes - Total revenue grew 13% to EUR 4.5 billion in Q4 2025, with premium revenue rising 14% driven by subscriber growth [32][34] - Gross margin expanded to 33.1%, an increase of over 80 basis points year-on-year, primarily due to favorable content costs [33] - Operating income reached EUR 701 million, exceeding forecasts by EUR 81 million, with free cash flow at EUR 834 million [33][34] Business Line Data and Key Metrics Changes - The advertising business grew 4%, remaining flat compared to the previous quarter, but showed a 7% growth when excluding podcast optimization strategies [32] - In podcasting, video podcast consumption increased by over 90% since the launch of the Spotify Partner Program, with more than 530,000 video podcast shows on the platform [16] - The company paid out over $11 billion to music rights holders in 2025, setting a global record for annual payments from a single source [15] Market Data and Key Metrics Changes - Monthly active users (MAUs) reached over 750 million, with a record number of net additions in Q4 2025 [13] - The company aims to convert 10% to 15% of the world's population into subscribers, indicating significant growth potential [18] Company Strategy and Development Direction - The company emphasizes a long-term growth strategy, prioritizing user and creator experiences while focusing on technology and innovation [5][9] - The focus for 2026 is framed as the year of raising ambition, with plans to enhance product offerings and user engagement through AI and new technologies [19] - The company aims to leverage AI to enhance personalization and interactivity, positioning itself as a leader in the evolving audio landscape [21][24] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued healthy MAU and subscriber growth throughout 2026, with expectations for improved revenue and gross margin [18][34] - The management highlighted the importance of adapting to macro changes and capturing opportunities presented by technological advancements [39][40] Other Important Information - The company repurchased $433 million worth of shares in Q4 2025 and plans to continue opportunistic capital returns [33] - The company has been investing in AI technologies to enhance user experiences and streamline internal processes, positioning itself for future growth [23][29] Q&A Session Summary Question: How is Spotify planning to use AI tools and applications for new and evolving product offers? - Management emphasized that AI will enhance user interaction and personalization, positioning Spotify as a leading intelligent media platform [39][40] Question: What are the drivers of Gross Margin expansion in 2026? - Management indicated that price increases and improvements in the advertising business will contribute to gross margin growth [44][46] Question: Can you provide a progress report on your ad tech platform? - Management reported record levels of advertisers on the platform, indicating positive progress in ad revenue growth [48][49] Question: How do you see the price to value relationship of the service relative to competitors? - Management noted that churn remains low following recent price increases, and they strive to create more value than price [66][67] Question: What's changed at Spotify following Daniel stepping back from the CEO role? - Management highlighted a focus on synchronization and planning, with a new structure for decision-making to enhance operational efficiency [68][69]

Financial Data and Key Metrics Changes - Spotify surpassed 700 million monthly active users (MAU), exceeding guidance by 3 million, and added 5 million net subscribers, reaching a total of 281 million, up 12% year-on-year [4][24] - Total revenue for Q3 was EUR 4.3 billion, growing 12% year-on-year on a constant currency basis, with premium revenue rising 13% year-on-year [24][25] - Gross margin was 31.6%, 50 basis points ahead of guidance, and operating income was EUR 582 million, EUR 97 million above forecast [25][26] - Free cash flow for the quarter was EUR 806 million, with cash and short-term investments totaling EUR 9.1 billion [26] Business Line Data and Key Metrics Changes - In music, Spotify helped artists reach massive global audiences, breaking multiple streaming records and launching new in-app experiences [10] - In podcasts, over 390 million users streamed video podcasts, a 54% increase year-on-year, with time spent on video content more than doubling [11] - In audiobooks, the number of listeners rose 36% year-on-year, with over half of eligible Premium users having played an audiobook [13] Market Data and Key Metrics Changes - Spotify continues to take market share in competitive markets, with steady retention rates following price increases across more than 150 markets [9] - The global rollout of the enhanced free experience significantly contributed to user growth and engagement [9] Company Strategy and Development Direction - The company focuses on long-term value rather than quarterly results, emphasizing lifetime value and smart investments [5][6] - Spotify's multi-format strategy is proving effective, driving user engagement across music, podcasts, video, and audiobooks [4][5] - The leadership transition is set for January 1st, with Alex Norström and Gustav Söderström stepping into co-CEO roles, indicating a continued focus on growth and innovation [7][46] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strategy for the advertising business, expecting growth to improve in the latter half of 2026 [25][56] - The company is optimistic about the impact of AI on user experience and content creation, aiming to responsibly integrate AI tools for artists and creators [40][71] Other Important Information - Spotify has launched significant enhancements to its free tier and introduced lossless audio for Premium users, which have been well-received [18][19] - The partnership with Netflix for video podcasts is seen as a strategic move to enhance creator offerings and expand distribution channels [41][66] Q&A Session Summary Question: Can you talk through the puts and takes around gross margins across your premium and advertising segments in the third quarter? - Management noted that gross margin expansion is occurring, with pressure on the premium side due to the shift of podcast content costs to premium [32] Question: Will the premium superfan tier be created by major labels for all DSPs or a Spotify-specific product? - Management confirmed deep collaboration with rights holders and positive uptake on add-on subscriptions, indicating a strong strategy for premium offerings [34] Question: What impact do you believe AI will have on the music ecosystem? - Management highlighted that AI will enhance recommendations and user control, with Spotify integrating AI tools to benefit creators [36][39] Question: How does the partnership with Netflix impact your overall strategy for video consumption? - Management emphasized a creator-first approach, stating that the partnership enhances distribution opportunities for creators [41][66] Question: Have you seen any changes to the rate of upgrade from free to premium due to recent upgrades? - Management indicated that increased usage and engagement are expected to lead to higher conversion rates from free to premium [43][45] Question: What do you think you've achieved with the new deals with major labels? - Management stated that modernized deals with top publishers provide broader video rights and support innovation in product offerings [60]

Financial Data and Key Metrics Changes - Spotify surpassed 700 million monthly active users (MAU), exceeding guidance by 3 million, and added 5 million net subscribers, reaching a total of 281 million, which is a 12% year-on-year increase [4][24] - Total revenue for Q3 was EUR 4.3 billion, growing 12% year-on-year on a constant currency basis, with premium revenue rising 13% year-on-year [24][25] - Gross margin improved to 31.6%, 50 basis points above guidance, and operating income was EUR 582 million, exceeding forecasts by EUR 97 million [25][26] Business Line Data and Key Metrics Changes - In music, Spotify helped artists reach massive audiences, breaking multiple streaming records and launching new in-app experiences [10] - Podcast engagement increased significantly, with over 390 million users streaming video podcasts, a 54% year-on-year increase [11] - Audiobook listening rose 36% year-on-year, with more than half of eligible Premium users having played an audiobook [13] Market Data and Key Metrics Changes - Spotify continues to gain market share in competitive markets, with steady retention rates following recent price increases across more than 150 markets [9] - The global rollout of the enhanced free experience contributed significantly to user growth and engagement [9] Company Strategy and Development Direction - The company focuses on long-term value rather than quarterly results, emphasizing lifetime value and smart investments [5][6] - Spotify's multi-format strategy is proving effective, driving user engagement across music, podcasts, video, and audiobooks [4][5] - The transition to co-CEOs is expected to maintain the company's ambitious growth trajectory, aiming for a billion subscribers [46][47] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term strategy for the advertising business, expecting growth to improve in the second half of 2026 [25][56] - The company is optimistic about the impact of AI on user experience and content personalization, enhancing engagement and retention [20][39] Other Important Information - Spotify has repurchased $77 million in shares during Q3, with a total of $410 million repurchased year-to-date [26] - The company is exploring partnerships and innovations in AI to enhance user experiences and support creators [40][71] Q&A Session Summary Question: Can you talk through the puts and takes around gross margins across your premium and advertising segments? - Management noted that gross margin expansion is occurring, with pressure on the premium side due to the shift of podcast content costs [32] Question: Will the premium superfan tier be created by major labels or a Spotify-specific product? - Spotify is collaborating with rights holders to create high-quality products, with positive uptake on recent add-ons like Audiobooks Plus [34][35] Question: What impact do you believe AI will have on the music ecosystem? - AI is expected to enhance recommendations and user control, with Spotify integrating ChatGPT to personalize user experiences [36][39] Question: How will the partnership with Netflix impact your overall strategy for video consumption? - The partnership is seen as a natural extension of Spotify's ecosystem, enhancing creator opportunities and revenue potential [41][66] Question: How significant is TV-based usage to Spotify today? - TV experiences are part of Spotify's ubiquity strategy, driving engagement and retention, with significant room for growth [67][68] Question: Can you talk about the elasticity in consumer behavior after recent price increases? - Price increases are part of Spotify's strategy, with adjustments made based on market dynamics and value provided [59][70] Question: What have you achieved with your label relationships? - Spotify has modernized deals with all major labels, securing broader video rights and enhancing the ability to innovate [60][61]

Financial Performance - Total revenue grew by 7% Y/Y to €4272 million, or 12% Y/Y on a constant currency basis[5, 7] - Premium revenue increased by 9% Y/Y to €3826 million, or 13% Y/Y on a constant currency basis, driven by subscriber gains[7, 18] - Ad-Supported revenue decreased by 6% Y/Y to €446 million, but was flat Y/Y on a constant currency basis[7, 19] - Gross margin reached 316%, exceeding guidance, and expanded 53 bps Y/Y[5, 8] - Operating income was €582 million, reflecting Y/Y and Q/Q expansion to a 136% margin[5, 8] - Free cash flow reached a Q3 record high of €806 million, bringing LTM free cash flow to €29 billion[5, 34] User Growth - Total monthly active users (MAUs) grew by 11% Y/Y to 713 million, exceeding guidance[5, 8] - Premium subscribers increased by 12% Y/Y to 281 million, in line with guidance[5, 8]

Core Insights - Spotify does not provide specific guidance for Q4 or 2026 but expects a strong seasonal Q4 to contribute to gross margin improvement [1] - The company is accelerating investments in generative AI and real-time reasoning infrastructure to enhance product delivery efficiency and user experience [1][16] - Future expense growth will be strategically adjusted to focus on driving "lifecycle value," balancing short-term efficiency with long-term growth [1][16] Financial Performance - The gross margin for the current quarter did not exceed expectations, reflecting a cautious approach to guidance based on market conditions and operational investments [3][4] - The company anticipates that the fourth quarter will not face the temporary factors affecting the current quarter, leading to improved gross margins [4] Business Strategy - Spotify plans to invest in three key areas for 2026: upgrading the technology stack for core products, experimenting with new business models driven by data and AI, and high ROI marketing projects [1][16] - The company aims to enhance revenue through marketplace and advertising monetization in music, scaling podcast advertising, and optimizing the audiobook experience [4][12] User Engagement and Market Expansion - Spotify has launched audiobook subscriptions in 13 markets to cater to Superfans, expanding its product tiers while maintaining user experience clarity [2] - The company sees significant potential for user penetration growth, targeting a rise from 3% to 10-15% of the global population as paid subscribers [8] Advertising and Monetization - The advertising business is a core pillar of Spotify's transformation strategy, with a focus on programmatic and direct sales models [20] - The introduction of alternative payment methods in the U.S. has improved subscription conversion rates and opened new monetization opportunities [10] Technological Advancements - Generative AI is expected to significantly enhance productivity and product development, allowing for more interactive consumer experiences [5][21] - The integration of large language models into core product experiences is anticipated to create long-term opportunities in intelligent dialogue and dynamic curation [21]