Spotify shares surged about 10 percent on Tuesday after the music streaming company reported stronger-than-expected earnings and solid user growth in the fourth quarter of fiscal 2025, signalling improved operating leverage and sustained global demand for its platform.
The Sweden-based group said monthly active users rose 11 percent from a year earlier to 751 million, surpassing analysts’ expectations of 744.7 million, according to FactSet estimates. Growth was driven by continued expansion in emerging markets and higher engagement with Spotify’s core music and discovery features.
Spotify reported earnings per share of 4.43 euros, well above market forecasts of 2.74 euros, while revenue came in at 4.53 billion euros, slightly ahead of expectations of 4.52 billion euros, according to LSEG data. Quarterly revenue increased 7 percent year-on-year.
The results boosted investor confidence, sending Spotify shares sharply higher in early trading and positioning the stock among the day’s top performers in the technology and media sector.
Executives said the company’s fourth-quarter performance reflected disciplined cost management, continued product innovation and strong engagement across its user base. Spotify also pointed to the success of its annual Spotify Wrapped campaign, which allows users to view personalised summaries of their listening habits.
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The company said the 2025 edition of Spotify Wrapped was its most successful to date, with more than 300 million users interacting with the feature globally. Analysts say the campaign has become a powerful driver of user engagement and organic marketing, particularly among younger audiences.
Spotify has been investing heavily in improving personalisation and discovery, while also expanding beyond music into podcasts and audiobooks. While podcasts remain a competitive and capital-intensive segment, management said the broader audio ecosystem helps deepen user engagement and differentiate the platform from rivals.
The earnings beat comes as Spotify faces intense competition from Apple Music, Amazon Music and YouTube Music, alongside a challenging digital advertising environment. Advertising-supported revenue has been under pressure across the industry, but Spotify said subscription growth continued to underpin its financial performance.
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User growth was particularly strong in newer and emerging markets, where Spotify has been rolling out lower-priced subscription tiers and localised content to attract first-time users. Analysts say these markets are key to Spotify’s long-term growth strategy, even as average revenue per user remains lower than in mature regions such as North America and Europe.
Spotify has also implemented selective price increases in some markets over the past year, helping support revenue growth while attempting to balance affordability with profitability.
Despite the positive results, the company did not provide detailed forward guidance, citing ongoing macroeconomic uncertainty and shifting consumer spending patterns. However, management said it remained focused on disciplined investment, margin expansion and long-term sustainable growth.
Investors have increasingly rewarded Spotify for demonstrating improved cost control after years of heavy spending on content and expansion. The company has previously undertaken restructuring measures and workforce reductions as part of efforts to streamline operations and improve profitability.
Market analysts said the latest results suggest Spotify is making progress in converting scale into earnings strength.
“The key takeaway is that Spotify continues to grow users at a healthy pace while showing it can deliver profits,” said one analyst. “That combination is what the market has been waiting to see.”
As competition in the streaming sector intensifies, Spotify’s ability to maintain user growth, control costs and monetise engagement will remain central to its valuation. Tuesday’s rally suggests investors are increasingly confident that the company is moving in the right direction.
