Spotify’s third-quarter results showed paid subscriptions rising to 306 million, one million above the company’s guidance, while total revenue increased 16% from a year earlier to €4.97 billion. The streaming group also reported 788 million monthly active users and operating income of €672 million for the three months ended September.
The subscriber gain was the clearest beat in the Spotify Q3 results. Premium membership grew 9% year on year and added six million users during the quarter. Monthly active users rose 11%, matching Spotify’s forecast of 788 million.
Spotify Q3 results lift paid subscribers to 306 million
Spotify said every major user and financial measure met or exceeded its own guidance. Its official Q3 shareholder update showed Premium revenue rising 17% to €4.49 billion, while advertising-supported revenue increased 10% to €482 million.
Price increases helped Premium average revenue per user reach €4.95, up 9.3% from a year earlier and 7.5% on a constant-currency basis. Spotify said the improvement was partly offset by its product and geographic mix. The company’s advertising business also returned to double-digit reported growth as automated sales channels expanded.
Gross profit climbed 21% to €1.64 billion. The gross margin reached 33.0%, 1.36 percentage points higher than a year earlier and slightly above Spotify’s 32.9% guidance. Operating income rose 15% to €672 million, although the operating margin slipped marginally to 13.5% from 13.6%.
Revenue growth comes with weaker quarterly cash flow
The quarter was not uniformly stronger. Free cash flow declined 9% from a year earlier to €735 million, while net cash from operating activities fell 11% to €740 million. Spotify still ended September with €9.9 billion in cash, restricted cash and short-term investments, giving it substantial room to fund product investment and share repurchases.
The company said it had repurchased US$1.1 billion of shares in 2026 through 21 October. It described that amount as enough to offset dilution from employee equity programmes and return additional cash to shareholders.
Reuters reported that Spotify’s €4.97 billion of revenue was narrowly below the €4.98 billion analyst estimate compiled by LSEG. The independent comparison matters because Spotify’s own guidance was met, while the market was also measuring the result against a slightly higher external consensus.
Spotify forecasts stronger fourth-quarter profit
For the fourth quarter, Spotify expects monthly active users to reach 818 million and Premium subscribers to rise to 316 million. The forecast implies 30 million additional monthly users and 10 million new paid subscribers during the holiday period.
Management guided for €5.2 billion in revenue, a 33.8% gross margin and €820 million of operating income. Reuters said the operating-income forecast was above Wall Street expectations, while the revenue outlook was slightly below consensus. Currency movements are expected to add about 2.3 percentage points to year-on-year revenue growth.
The company is supporting growth with product expansion. Spotify’s earnings announcement highlighted Taste Profile controls for US Premium subscribers, Creator Memberships and a planned expansion of audiobooks from 22 markets to more than 180 by year-end. Those initiatives deepen its push beyond music while keeping subscriptions at the centre of the business.
What investors should watch next
Spotify’s subscriber outperformance and rising gross margin support the case that price increases and a broader product mix can lift profitability. The next test is whether the company can deliver its fourth-quarter targets without slowing user growth or allowing marketing, cloud and artificial-intelligence spending to erode margins.
Investors are also comparing Spotify with other large digital platforms navigating high expectations. BullBuzz recently covered Meta’s 26% revenue increase, Netflix’s advertising outlook and Tesla’s mixed third-quarter performance.
For Spotify, the quarter leaves a balanced picture: subscriber additions beat guidance, revenue and profit advanced, and the margin outlook improved, but cash generation weakened and the fourth-quarter revenue forecast leaves little room for disappointment. The 316 million subscriber target will be the most visible measure of whether holiday demand can extend the momentum.