Spotify Reaches 306 Million Paying Subscribers as Its Ad Business Starts to Recover

Spotify, the music and audio streaming company, reported third-quarter results on Thursday, October 22, that beat its own subscriber forecast and pushed its gross margin to a record for the period. Premium subscribers grew 9 percent from a year earlier to 306 million, and monthly active users, or MAUs, rose 11 percent to 788 million.

The update was the latest under the company’s new co-chief executives, Alex Norström and Gustav Söderström, and it arrived with two messages for the industry: the long-struggling advertising business is beginning to recover, and Spotify now wants listeners to treat its app as something they can talk to as well as tap.

The Numbers Behind the Quarter

Total revenue for the three months to September 30 was 4,969 million euros, up 16 percent year on year, or 14 percent at constant currency. Premium revenue, from paying subscribers, rose 17 percent to 4,487 million euros, while ad-supported revenue grew 10 percent to 482 million euros.

Spotify said all of its key performance indicators met or exceeded guidance. It added 11 million MAUs, exactly as forecast, and 6 million subscribers, one million ahead of its own estimate. Average revenue per Premium user was 4.95 euros, up 9.3 percent, which the company attributed, excluding currency effects, to price increases, partly offset by product and market mix.

Profitability improved as well. Gross margin finished at 33.0 percent, a third-quarter record and 136 basis points higher than a year earlier, and operating income rose 15 percent to 672 million euros, an operating margin of 13.5 percent. Operating expenses climbed about 26 percent; excluding currency movements and social charges they rose 19 percent, which Spotify linked mainly to higher marketing and cloud and AI spending in support of growth initiatives. Free cash flow was 735 million euros, down 9 percent, and the company held 9.9 billion euros in cash, cash equivalents, restricted cash and short-term investments.

Spotify’s Third Quarter in Figures

Premium subscribers reached 306 million and monthly active users 788 million. Revenue was 4,969 million euros, up 16 percent, and operating income was 672 million euros. Gross margin was 33.0 percent. The company employed 7,284 full-time staff at the end of the quarter.

Where the Next Subscribers Come From

Spotify said MAUs and subscribers grew both year on year and quarter on quarter in every region. Chief financial officer Christian Luiga told analysts that the subscriber outperformance was broad-based and led by Rest of World and Latin America.

Europe remains the largest base of paying customers. According to Digital Music News, Europe accounted for 36 percent of subscribers and North America for 25 percent, while Rest of World and Latin America together made up 59 percent of monthly users.

Norström used the call to argue that the company is far from saturated. In Sweden, Spotify’s first and most established market, nearly 50 percent of the population pays for the service, he said, while the global figure is still under 4 percent. He put paid penetration in the United Kingdom and Germany at between 20 and 25 percent, Latin America at around 11 percent and emerging markets at less than 3 percent, adding that in those markets "we’re still early".

India was singled out. Asked about adding friction to the free tier in India and Indonesia, Norström described India as a market of 1.4 billion and GDP growth of 7 to 8 percent several years in a row.

Advertising’s Slow Turn

Advertising has been the weak part of Spotify’s business, and the quarter suggested a modest improvement. Ad-supported revenue grew 10 percent, or 9 percent at constant currency, with music advertising driven by more impressions sold but partly offset by softer pricing, according to the shareholder update. Automated sales channels remained the largest contributors to advertising growth.

Luiga said the advertising business is coming out of a longer period of single-digit growth. On the call he said that biddable advertising was now up to 40 percent of the business, and that Spotify expects to keep moving towards double-digit advertising growth in the fourth quarter. Ad-supported gross margin rose 105 basis points to 18.7 percent.

Spotify now wants listeners to treat its app as something they can talk to as well as tap.

Agents, Audiobooks and Creators

Product announcements during the quarter leaned heavily on personalisation and new formats. Spotify launched an integration with Muse that lets listeners use an AI agent to play music, save songs, build playlists and find books and podcasts. Söderström said that Spotify "is now an agent" that users can talk to, ask questions of and instruct, and Digital Music News reported that executives also highlighted an AI-powered remix and cover tool without committing to a release date.

Audiobooks are going global, expanding from 22 markets to more than 180 by the end of 2026, with more than 350,000 titles spanning over 120 languages. Spotify also launched Creator Memberships in 34 markets, letting eligible podcast creators sell paid memberships to fans, and extended its Spotify Partner Program to more than 35 new markets, including Italy, Spain, Brazil, Mexico, Poland and Colombia.

Managed Accounts for listeners aged 13 and under are now available to families in the United States, the United Kingdom, Australia, France, Germany and the Netherlands, and a Taste Profile feature that lets users see and edit how Spotify understands their preferences launched for Premium subscribers in the United States.

Market Reaction and the Fourth-Quarter Outlook

Investors welcomed the figures. Spotify shares closed on Thursday at 583.66 dollars, up 11.19 percent, but still well below their October 2025 high of 673.86 dollars, Hypebot reported. Several analysts raised their price targets after the report, among them Morgan Stanley to 700 dollars and Evercore ISI to 750 dollars.

For the fourth quarter, Spotify forecasts 818 million MAUs, implying about 30 million net additions, and 316 million Premium subscribers, implying about 10 million. It expects revenue of 5.2 billion euros, gross margin of 33.8 percent and operating income of 820 million euros.

Luiga said fourth-quarter growth in revenue per user would be partly offset by the lapping of the previous year’s pricing actions across more than 150 markets. The company has also been returning cash to shareholders, having repurchased 1.1 billion dollars of its shares so far this year, through October 21.

Sources

• Spotify Q3 2026 Update (Form 6-K, Exhibit 99.1), Spotify Technology S.A. via SEC
• Spotify (SPOT) Q3 2026 Earnings Call Transcript, The Motley Fool
• Spotify Stock Climbs Following Solid Q3 2026 Earnings Report, Digital Music News
• Spotify Q3 2026: 788M Users and 306M Subscribers, Hypebot