Spotify shares jumped 15% on Tuesday after the streaming giant reported record user growth and profitability that exceeded Wall Street expectations.
The company added 38 million monthly active users in the fourth quarter of 2025, marking its highest quarterly net additions in history. Total monthly active users reached 751 million, an 11% increase from the previous year and above analyst projections of 745 million.
Premium subscribers grew 10% year-over-year to 290 million, with 9 million net additions during the quarter. The growth occurred despite back-to-back price hikes in more than 150 markets, showing continued user willingness to pay for Spotify's ecosystem.
Revenue rose to €4.5 billion ($5.4 billion) in Q4, a 7% year-over-year increase that translates to 13% growth on a constant-currency basis. Operating income surged 47% to €701 million ($834 million), while gross margin expanded to 33.1%, the highest in company history.
Spotify's performance came during its first quarter under new leadership. Founder Daniel Ek stepped down as CEO in January 2026, passing the role to co-CEOs Alex Norström and Gustav Söderström. Ek remains actively involved as executive chairman.
"We marked our highest quarter ever for MAU net additions," Norström said. "It's incredible to think that we now serve over three-quarters of a billion people around the world."
The company attributed much of its success to Spotify Wrapped, its annual year-end listening summary. The feature engaged more than 300 million users and generated over 630 million social media shares across 56 languages, making it the biggest Wrapped campaign to date.
Spotify also rolled out AI-powered features including Prompted Playlists, which lets Premium users create playlists using natural language descriptions. The company has been expanding its feature set with tools like About the Song swipeable story cards.
The company expanded audiobook access to five new countries and introduced tools like Audiobook Recaps and Page Match for seamless reading-listening transitions.
On the financial front, Spotify paid more than $11 billion to the music industry in 2025, which it claims represents the largest annual payment to music creators by any platform in history. The company also helped artists generate over $1 billion in ticket sales through live event integrations.
Looking ahead, Spotify forecasts 759 million monthly active users for Q1 2026, exceeding analyst expectations of 752 million. The company expects to add 3 million premium subscribers, bringing the total to 293 million.
Operating income guidance of €660 million for the current quarter also beat Wall Street estimates of €652 million. The company maintained its revenue projection at €4.5 billion.
"We are pleased with our performance heading into 2026 and view the business as well-positioned to deliver growth and improving margins," Spotify said in its earnings release.
The stock surge marked Spotify's best single-day performance since 2019, with shares climbing as much as 15% in premarket trading before settling at a 14% gain by market close. The rally followed a 35% decline over the previous two months amid concerns about AI's impact on the music industry.
Spotify now operates in 184 markets and has transformed from a music streaming service into what Ek described as "a technology platform for audio, and increasingly, for all the ways creators connect with audiences."
