10 Feb 2026
Spotify reports massive fourth-quarter earnings
Shares of Spotify Technology experienced a remarkable increase of over 14% at the market open on Tuesday, following the release of the streaming giant's fourth-quarter earnings report, which significantly outperformed analysts' expectations.
This impressive performance was fueled by strong user growth and enhanced profitability metrics. For the fourth quarter, Spotify reported earnings per share (EPS) of 4.43, which far exceeded the analyst consensus estimate of 2.85. The company's revenue reached 4.53 billion, slightly surpassing the expected 4.52 billion, marking a 7% increase year-over-year (YoY), or 13% when adjusted for constant currency fluctuations.
One of the standout figures from the report was the monthly active users (MAUs), which climbed to 751 million, exceeding the anticipated 745.24 million and reflecting an 11% growth compared to the previous year. Spotify's management expressed optimism about the company’s trajectory, stating:
"We are pleased with our performance heading into 2026 and view the business as well-positioned to deliver growth and improving margins." In a noteworthy achievement, Spotify added a record 38 million MAUs during the quarter, surpassing its own guidance of 32 million, which underscores the platform's ability to attract and retain listeners.
The number of premium subscribers also saw a significant increase, growing by 10% YoY to reach 290 million, with 9 million net additions in the quarter. This growth in premium subscriptions is critical for Spotify, as it represents a key revenue stream. The gross margin improved to 33.1%, an increase of 83 basis points from the previous year, while operating income surged 47% YoY to 701 million, translating to a robust 15.5% operating margin.
Looking ahead, Spotify provided guidance for the first quarter of 2026, forecasting revenue of 4.5 billion, which is slightly below the consensus estimate of 4.57 billion. However, the company is optimistic about its user growth, projecting monthly active users to reach 759 million, surpassing analyst expectations of 752.45 million. This forward-looking statement indicates Spotify's confidence in its ongoing strategies to expand its user base.
Importantly, Spotify emphasized its commitment to the music industry, stating, "We paid out over $11 billion to the music industry in 2025 - the largest annual payment to music creators in history." This highlights the platform's role in supporting artists and creators, which is increasingly important in the competitive streaming landscape.
The company’s free cash flow for the quarter was reported at 834 million, contributing to a total of 2.9 billion for the full year of 2025. This figure reflects Spotify's strengthening financial position, even in the face of currency headwinds that impacted revenue growth by approximately 580 basis points.
Analysts have responded positively to these results, with Barclays analyst Kannan Venkateshwar noting that the "quarter and guide should help offset concerns about growth sustainability."
As Spotify continues to navigate the complexities of the streaming market, its focus on user growth, profitability, and investment in the music ecosystem will be crucial in maintaining its competitive edge and delivering value to shareholders. The company's ability to adapt to changing market conditions and consumer preferences will be key to its long-term success in the evolving digital audio landscape.
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