Spotify Technology shares are climbing with conviction. Why is SPOT stock up today?
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Operator
Good day and welcome to Spotify’s fourth quarter 2025 earnings call and webcast. All participants are in a listen only mode. If you require operator assistance at any time, please press star zero. As a reminder, this conference call is being recorded. I would now like to turn the call over to Brian Goldberg, Head of Investor relations. Thank you. Please go ahead.
Bryan Goldberg (Head of Investor Relations)
Thanks, operator. And welcome to Spotify’s fourth quarter 2026 earnings conference call. Joining us today will be our Founder and Executive Chairman Daniel ek, our co CEOs Alex Norstrom and Gustav Soderstrom, and our CFO Christian Luiga. We’ll start with opening comments from the team and afterwards we’ll be happy to answer your questions. Questions can be submitted by going to slido.com slido.com and using the code spotifyearningsq425. Analysts can ask questions directly into Slido and all participants can then vote on the questions they find the most relevant. If for some reason you don’t have access to Slido, you can email [email protected] and we’ll add in your question. Before we begin, let me quickly cover the safe harbor. During this call we’ll be making certain forward looking statements, including projections or estimates about the future performance of the company. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors discussed on today’s call in our shareholder deck and in filings with the securities and Exchange Commission. During this call, we’ll also refer to certain non IFRS financial measures. Reconciliations between our IFRS and non ifrs financial measures can be found in our shareholder deck, in the financial section of our investor relations website and also furnished today on Form 6-K. And with that I’ll turn it over to Daniel.
Daniel Ek (Founder and Executive Chairman)
All right. Hey everyone and thanks for joining. As a short counting exercise has just shown me, this is my 32nd earnings call and as you know, this was the last one that I did in the role as CEO. Alex, Gustav and Christian will give you an overview of the business and cover the quarter. But before I hand it over, I wanted to share a few thoughts. First, I want to say gratitude to the incredible teams at Spotify, to the artists, creators and authors we build for the more than three quarters of a billion people. Listen with us daily. Thank you. And thank you to all of you as well. I can say that I’ve generally valued these conversations with our investors, with analysts and even the tough questions getting to build a company like this and, and to share that Journey with people who care about where it’s going. It’s been a real privilege. From day one, our focus has been simple. Build the best experience for listeners, be the best partner for artists and creators, and do it in a way that scales globally. And that remains true almost 20 years in. And for those participating on the call, I know a huge portion of your role is scoring the companies you cover. So if you want a framework for evaluating Spotify going forward and what to hold us accountable to, I’d point to three key things. And then you must also layer on the culture that makes them possible. First, we solve problems at the intersection of consumers and creators. This is where we focus. If something is good for the consumer and also good for the creator, that’s where you’ll find us every time. Discover Weekly wrapped Spotify for Artists, our new mobile free tier. These aren’t just features, they’re proof points. We build tools that help artists reach listeners they’d never find otherwise, and in turn, help listeners discover music they didn’t know they loved. And we built an ecosystem where artists, listeners, creators, authors and advertisers reinforce each other. That intersection is where we’ve always won, and it’s where the next decade gets built. Second, we are first and foremost a technology company. We’ve said for years that we aim to be the R&D arm for the music industry. And if I may say so, nearly 20 years in, I. I think we’ve earned that. We drove the shift from downloads to streaming and subscription, and we proved the model could work at scale. But here’s what excites me the most. Our capabilities now extend far beyond music. Today, what we built is a technology platform for audio and increasingly for all ways creators connect with audiences. And this identity will matter even more going forward. The next wave of technology shifts AI, new interfaces, wearables, new ways of interacting with content. These will reshape how people discover and experience audio and media. The hard problems I had in music, in podcasts, in books and video, in live, and in things we haven’t even built yet, we’re going to keep building the technology to solve them. Third, we play the long game. When we went public in 2018, I talked about long term value creation. While I know many of you focus quarter to quarter, that’s not how we grade ourselves, and it’s never have been. We choose growth over profitability for many years, and I know that was painful for some of you, but in order to scale, it was the right thing for consumers and creators, and ultimately for the business we’re running today. We acquired Echo Nest back in 2014 when most people didn’t understand why a streaming company needed a machine learning AI company. And that bet gave us personalization, something that’s now core to everything we do. We built our ubiquity play that’s called Spotify connect starting in 2011, right as we launched in the US at the time, every major tech platform was building their own wall garden for audio. The conventional wisdom was pick an ecosystem and live inside it. We bet the other way. We decided Spotify should work everywhere. In your car, your speaker, your tv, your gaming console, regardless of whose ecosystem you’re in. Apple’s, Google’s, Amazon, Samsung, Sonos, all of them seamlessly. And today, Spotify works across more than 2,000 devices from over 200 brands. And you can start a song on your phone and you can finish it on your tv. That doesn’t happen by accident. It happens because we choose ubiquity over control, openness over lock in. And we stuck with it for over a decade. These weren’t obvious calls at the time, but they compound. And that long term orientation will continue to guide Spotify. Which brings me to talent. Because we take a long term view there too. At Spotify, we built a culture that tries to build and reward trust. Trust to take risks, trust to fail and learn. Trust to challenge each other and share the thinking behind our decisions. And here’s why that moving fast isn’t just about how much you ship. It’s about shipping the right things. A culture of trust gives you both. People dare to try, but they also dare to debate, to push back, to find the better path together. That’s how you iterate quickly without losing direction. If there’s trust. Most processes are easy, allowing you to move very fast. A culture of trust is hard to replicate. And it’s why we develop leaders from within. And I think Alex and Gustav are great proofs of this. They’ve been at the center of nearly every major shift in this company. Mobile, subscription, machine learning, podcast, audiobooks, marketplace, etc. Etc. They didn’t inherit Spotify, they really helped building it. And of course I’m not going anywhere. I’ll be here as Executive Chairman, focus on the long term. But this is their moment to lead and I have deep confidence in them. Not because everything will go perfectly, of course it won’t, but because I’ve watched them solve problems that looked impossible and then do it again and, and again. And they’re not here to protect what I built. They’re here to build what we haven’t imagined yet. And their success is our success and I’m rooting very hard for them. And with that, I’m going to hand it over to Alex, Gustav and Christian.
Alex Norström (Co-CEO)
Thank you Daniel and congratulations on a legendary run. Wow. Both Gustav and I thank you for the encouraging words and your trust. We closed out what we dubbed as the Year of Accelerated Execution with another solid quarter delivering a strong finish to 2025. In Q4, we met or exceeded guidance across all the key metrics. We marked our highest quarter ever for MAU net additions. It’s just incredible to think that we now serve over 3/4 of a billion people around the world. Since going public, I have been touting the importance of our flywheel and it all starts with MAU growth, which in turn fuels the growth of our overall business. A driver of MAU outperformance is Spotify Wrapped, which was also record breaking this year. While we saw impressive engagement back in 2024, we also got feedback on the user experience. So this year we turned up the dial and the response was redeeming. At the end of the campaign, more than 300 million users engaged, which was up 20%. And we saw more than 630 million shares across social media, which is up 42%. Even more. Day one of Spotify Wrapped marked the highest single day of subscriber intake in Spotify history. Lots of learnings and we take our responsibility seriously to deliver on this much anticipated moment every year for our users. We’re also driving significant business growth for creative industries and in in 25 we paid out more than $11 billion to music rights holders, once again setting a global record for the highest annual payment from a single source. This takes us to nearly $70 billion since our founding in podcasting. Video podcast consumption on Spotify has increased by more than 90% since the launch of the Spotify Partner Program, or what we call SPP. There are now more than 530,000 video podcast shows on our platform and I hope you all caught the watershed moment at the Golden Globes where Spotify and the ringers “Good Hang” with Amy Poehler won the first ever Best Podcast award. This milestone underscores podcasting’s impact on culture and we’re proud to have been a key part of it. Now, rounding things out with audiobooks, we expanded audiobooks in premium to to more markets where we’re already finding some of the world’s most passionate listeners. As we continue to scale this, leading global publishers have credited us with bringing in new listeners and driving double digit growth in audiobooks. Now you should expect Gustav and I to continue to optimize for and be relentless about creating value for users. Because when people spend more days in a month with us across more moments, more devices and more verticals, it proves our product is working. It means our investments into personalization and AI are paying off. It means we’re doing a great job sharing the art made by our artists, podcasters and authors. What this ultimately translates into is greater engagement and retention, which unlocks more revenue growth. And as our revenue grows, we bring more value back to our partners, more artists and creators. And with scale comes more opportunity for innovation and margin expansion. Disciplined reinvestment of this pushes growth even further. This is our formula. Rinse and repeat. As we’ve mentioned before, we have one of the greatest TAMs in the world. That’s because everyone has a relationship with music and podcasts and audiobooks. It deepens that connection even further. We proudly count 3.5% of the world as subscribers and there’s still lots of room to grow. It’s not implausible to imagine us converting 10 or even 15% of the world’s population to subscribers with strong performance across all metrics including user growth, revenue, gross margin, operating income and cash flow. I’m confident about our position and I’m optimistic about 2026 and beyond. We expect continued healthy MAU and subs growth throughout the year while maintaining our consistently low churn. We will also make further progress on driving top line growth and expanding gross margin. In closing, you might be wondering about our focus for 2026. We are framing it as the Year of Raising Ambition. We were founded to solve what we felt like the impossible, and ambition has been the driving force behind our success from our earliest days. And ambition will be a guiding principle of our next chapter. We are looking forward to telling you more about it at our Investor Day in May of this year. Though what I’m certain about is that Gustav will take the opportunity to tease some of that, hopefully not giving away all of it. And with that I will pass it over to Gustav.
Gustav Söderström (Co-CEO)
Thank you Alex. I will try to contain myself in 2025 we launched more than 50 new features and innovations Shout out to prompted playlist page match about the song that all launched very recently, actually in the last few weeks. So I think it’s fair to say that we more than delivered on our bold ambitions of last year, pushing every boundary and driving engagement even higher. Now I think it’s important to zoom out as I know there’s been a lot of commentary around AI over the last few weeks and actually last several months. Like any significant global shift, we know that there will be winners and losers. But there is no question in my mind that we will continue to be one of the big beneficiaries of AI. I’m expecting a lot of questions on AI in the Q and A, so let me share a bit more up front. My view is that new technology is seldom disruptive on its own. Significant disruption happens when new technologies enable new asymmetric business models. For example, this is what Spotify did to music downloads. This is what Uber did to taxi service. So the question everyone should be asking is, does this evolution create new business models or are we mostly just seeing new technologies? For example, in SaaS, there is currently a lot of fear that the perceived business model will be challenged by more outcome based models, which is reasonable. However, in the consumer space that we are in, we believe the dominant business model will continue to be ads plus subscription, both places where Spotify excels. This puts Spotify in an outstanding position because we already have the right business model. Our job then just becomes leveraging these new technologies to our benefit, which is something that we’ve done consistently for the last 18 years. Another reason that we are in a strong position is that we have been building for this moment for some time. Back in 2021, we saw the potential of AI that would be able to think and speak at the level of a human. So we acquired AI voice platform Synantic in 2022, and this put us on an early path to introduce agentic experiences to Spotify users. One example of this is the wildly popular interactive DJ, which we introduced in 2023 and have continued to enhance since then. About 90 million subscribers have used IDJ so far, driving over 4 billion hours of time spent on Spotify. And this keeps growing. More recently, we also launched Prompted Playlist, a new tool that has instantly taken off with power users. So if Interactive DJ is the chat interface to Spotify, where you can talk casually, Prompted Playlist is the deep research mode of Spotify. It lets you describe and set rules for your own personalized playlists, literally writing your own algorithm. It taps into your entire Spotify listening history, reflecting not just current obsessions, but the full arc of your music taste and integrates up to the minute culture pulled from the Internet. There is nothing else like it. So all of this teases the next evolution of Spotify, delivering the world’s most intelligent agentic media platform, one that you can literally talk to, that fully understands each individual listener and puts them in the driver’s seat. It’s about moving from a passive experience to an interactive one. This is a stark contrast to most media services today. Innovation like this drives retention and time spent on Spotify, enhancing customer LTVs and monetization potential and and the momentum is undeniable. Looking at the US alone, monthly streaming hours per user have grown more than 20% in the last five years, and we feel well positioned to make continued gains here. Another example of interactivity is the smashing success of our new mixing tools. We recently hit a milestone of 50 million mix playlists, and listeners are now making more than 1 million transitions per day, building yet another unique data set that improves our experience. People don’t just want to listen, they want to actively participate in the music. They want to shape it. This is now becoming possible in ways that were previously unimaginable. So on that note, there is obviously a lot of conversation around AI and music right now. So let me just share how we think about it. We see two distinct categories emerging. One, artists making original music from scratch and two, new versions of existing music like covers or remixes. The first category means a lot of net new music and more content than ever being delivered to Spotify. Importantly, a growing catalog has always been very good for us because it attracts new users, drives engagement and builds fandoms. As more artists incorporate AI tools, the lines around making music are blurring. But while the music may be generated on various AI platforms, the point is that regardless of where the music is made, the cultural moment always happens on Spotify. That is where all music charts and finds an audience. This is because Spotify has long been the place that delivers both ...
