Q3 FY2026
Filed Oct 22, 2026Q3 2026 revenue grew 16% Y/Y to €4,969 million as MAUs and Premium Subscribers met or exceeded guidance, while Gross Margin and Operating Income surpassed guidance.
All KPIs met or exceeded guidance. Revenue was in line, Gross Margin and Operating Income were above guidance, and Premium Subscribers were above guidance. Revenue, users and gross profit grew year over year, although operating cash flow and Free Cash Flow declined year over year amid unfavorable working-capital movements and elevated operating-expense growth.
Key metrics
shortened, hover for the filing’s print| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total Monthly Active Users (MAUs)other | 788M | 1% | 11% |
| Premium Subscribersother | 306M | 2% | 9% |
| Ad-Supported MAUsother | 499M | 1% | 12% |
| Total Revenueother | €4.97B | 4% | 16% |
| Revenue excluding foreign exchange effectnon-GAAP | €4.89B | – | 14% |
| Gross profitother | €1.64B | 3% | 21% |
| Gross profit excluding foreign exchange effectnon-GAAP | €1.61B | – | 19% |
| Cost of revenueother | €3.33B | – | – |
| Gross Marginother | 33.0% | – | up 136 bps Y/Y |
| Premium Gross Marginother | 34.5% | – | up 130 bps Y/Y |
| Ad-Supported Gross Marginother | 18.7% | – | up 105 bps Y/Y |
| Total Operating Expensesother | €967M | – | 26% |
| Operating expense excluding foreign exchange effectnon-GAAP | €956M | – | 24% |
| Research and development expenseother | €417M | – | 35% |
| Research and development expense excluding foreign exchange effectnon-GAAP | €412M | – | 33% |
| Sales and marketing expenseother | €406M | – | 16% |
| Sales and marketing expense excluding foreign exchange effectnon-GAAP | €402M | – | 15% |
| General and administrative expenseother | €144M | – | 30% |
| General and administrative expense excluding foreign exchange effectnon-GAAP | €142M | – | 28% |
| Operating Incomeother | €672M | 3% | 15% |
| Operating income excluding foreign exchange effectnon-GAAP | €653M | – | 12% |
| Operating Marginother | 13.5% | – | – |
| Finance income - netother | €33M | – | – |
| Income before taxother | €705M | – | – |
| Income tax expense/(benefit)other | €187M | – | – |
| Net income attributable to owners of the parentother | €518M | – | – |
| Basic earnings per share attributable to owners of the parentother | €2.52 | – | – |
| Diluted earnings per share attributable to owners of the parentother | €2.48 | – | – |
| Net cash flows from operating activitiesother | €740M | -9% | -11% |
| Free Cash Flownon-GAAP | €735M | -8% | -9% |
| Last twelve months Free Cash Flownon-GAAP | €3.19B | – | – |
| Capital expendituresother | €6M | – | decreased €17 million Y/Y |
| Premium Average Revenue per User (ARPU)other | €4.95 | – | up 9.3% Y/Y |
| Premium Average Revenue per User (ARPU) excluding the impact of FXnon-GAAP | . | – | 7.5% Y/Y constant currency |
| Social Charges on share-based compensationother | €22M | – | €13 million above forecast |
| Full-time employees globallyother | 7,284 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| PremiumGrowth reflected subscriber and ARPU gains. Excluding the impact of FX, ARPU growth was driven by price increase benefits, partially offset by product/market mix. | €4.49B | 4% | 17% |
| Ad-SupportedMusic advertising performance was driven by growth in impressions sold, partially offset by softness in pricing. Podcasting growth was led by sponsorship gains within the Owned & Licensed portfolio, while automated sales channels remained the largest contributors to advertising growth. | €482M | 8% | 10% |
Q4 2026 outlook
- Revenue€5.2 billion
- Gross margin33.8%
- NoteTotal MAUs: 818 million
- NoteImplies the addition of approximately 30 million net new MAUs in the quarter
- NoteTotal Premium Subscribers: 316 million
- NoteImplies the addition of approximately 10 million net new subscribers in the quarter
- NoteOperating Income: €820 million
- NoteAssumes ~230 bps tailwind to growth Y/Y due to foreign exchange rate movements
- NoteOperating Income incorporates €6 million in Social Charges based on a Q3 close share price of $487.38
Capital returns
- Repurchases of ordinary shares were €313 million in Q3.
- Spotify repurchased $1.1 billion in shares year-to-date through October 21st.
- The company bought back approximately 3 million shares since it resumed repurchase activity in August of 2025, or approximately 1.5% of shares outstanding.
- Year-to-date repurchases represented full neutralization of dilution from employee equity programs in 2026 and additional returns of excess cash.
What drove it
- Premium Revenue growth reflected subscriber and ARPU gains.
- Ad-Supported Revenue growth reflected impressions sold, sponsorship gains and automated sales channels, partially offset by softness in music advertising pricing.
- Gross Margin improvement reflected Premium revenue growth outpacing music costs net of marketplace programs, audiobooks costs and video podcast costs.
- Ad-Supported gross-margin expansion reflected revenue growth, favorability in podcast cost structure and Other Costs of Revenue.
- Operating Income outperformed guidance due to lower-than-forecast marketing and personnel-related costs and Gross Margin strength, partially offset by higher Social Charges.
- MAU and Premium Subscriber growth occurred year over year and quarter over quarter across all regions.
Concerns
- Operating Expenses increased ~26% Y/Y, driven by temporarily elevated marketing and cloud/AI spend, including €22 million in Social Charges.
- Social Charges were €13 million above forecast due to share-price movement during the quarter.
- Music advertising pricing was soft.
- Free Cash Flow declined 9% Y/Y and reflected unfavorable movements in net working capital.
- Net income attributable to owners of the parent was €518 million, versus €899 million in the prior-year period.
What to watch
- Delivery against Q4 guidance for 818 million MAUs and 316 million Premium Subscribers.
- Whether Q4 Total Revenue reaches €5.2 billion under the assumed ~230 bps foreign-exchange tailwind to Y/Y growth.
- Whether Gross Margin reaches 33.8%, supported by expected favorability in both Premium and Ad-Supported segments.
- Operating Income delivery against €820 million, including the assumed €6 million in Social Charges.
- The impact of further share-price movements on Social Charges. At the Q3 close, a 10% increase or decrease in stock price would have an approximate +/- €20M impact on Social Charges.
- Execution of audiobook expansion from 22 markets to more than 180 by the end of 2026.
Balance sheet and cash flow
- Cash and cash equivalents, restricted cash and short term investments were €9.9 billion at the end of Q3.
- Cash and cash equivalents were €6,032 million at September 30, 2026.
- Short term investments were €3,856 million at September 30, 2026.
- Long term investments were €1,066 million at September 30, 2026.
- Total assets were €14,312 million at September 30, 2026.
- Equity attributable to owners of the parent was €8,741 million at September 30, 2026.
- Total liabilities were €5,571 million at September 30, 2026.
- Exchangeable Notes were €0 at September 30, 2026, compared with €1,458 million at December 31, 2025.
- Net cash flows from operating activities were €740 million.
- Net cash flows used in investing activities were €354 million.
- Net cash flows used in financing activities were €305 million.
- Net increase in cash and cash equivalents was €81 million.
Analysis
Spotify reported broad-based user and financial growth in Q3 2026. Total MAUs rose 11% Y/Y to 788 million and Premium Subscribers rose 9% Y/Y to 306 million, with growth year over year and quarter over quarter across all regions. MAUs were in line with guidance and Premium Subscribers were one million above guidance. Premium revenue increased 17% Y/Y to €4,487 million on subscriber and ARPU gains, while Ad-Supported revenue grew 10% Y/Y to €482 million.
Total Revenue rose 16% Y/Y to €4,969 million, or 14% Y/Y on a constant-currency basis. Foreign exchange aided Y/Y revenue growth by approximately 190 bps. Premium was the primary revenue contributor, while advertising showed improved performance from impressions sold, sponsorship gains in owned and licensed podcasting, and automated channels. The advertising result still included softness in music advertising pricing.
Profitability strengthened at the gross-profit level. Gross profit increased 21% Y/Y to €1,639 million and Gross Margin expanded 136 bps Y/Y to 33.0%, above the 32.9% guidance. Premium Gross Margin improved 130 bps Y/Y to 34.5%, and Ad-Supported Gross Margin improved 105 bps Y/Y to 18.7%. The gains reflected revenue growth outpacing music costs net of marketplace programs, audiobooks costs and video podcast costs, alongside favorable podcast cost structure and Other Costs of Revenue in advertising.
Operating Income increased 15% Y/Y to €672 million, above €670 million guidance, although Operating Margin was 13.5% compared with 13.6% in the prior-year period. Operating expenses increased 26% Y/Y to €967 million amid marketing and cloud/AI spending, plus €22 million of Social Charges. Those Social Charges were €13 million above forecast, while lower-than-forecast marketing and personnel-related costs and gross-margin strength supported the operating-income outperformance. Net income attributable to owners of the parent declined to €518 million from €899 million, with lower finance income and a €187 million income tax expense versus a €72 million benefit in the prior-year period.
Cash generation remained substantial but declined from the comparison periods. Net cash flows from operating activities were €740 million and Free Cash Flow was €735 million, down 11% and 9% Y/Y, respectively, as higher net income adjusted for non-cash items was offset by unfavorable working-capital movements. The company ended the quarter with €9.9 billion in cash and cash equivalents, restricted cash and short term investments, and repurchased $1.1 billion in shares year-to-date through October 21st. Q4 guidance calls for 818 million MAUs, 316 million Premium Subscribers, €5.2 billion of revenue, 33.8% Gross Margin and €820 million of Operating Income.
Not in the filing
stated, not guessed- Previous-release outlook was not provided, so no comparison with prior guidance is available.
- Non-IFRS net income and non-IFRS EPS were not reported.
- A Q3 2026 effective tax rate was not reported.
- Dividend amount was not reported.
- Total debt was not reported as a single line item.
- Premium ARPU value on a constant-currency basis was not reported.
- Prior-year and prior-quarter values for Premium Gross Margin and Ad-Supported Gross Margin were not reported.
- Q3 2026 revenue by geographic region was not reported.
Written by an AI language model from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure is checked against the filing text, and a metric the filing does not print, or whose value, prior period and change do not add up, is dropped from the metrics. The model can still misread a table, in the metrics or in the text, so check a number in the filing before you rely on it. Consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.