Spotify shares jumped after the company delivered a strong fourth quarter, showing how its viral Wrapped campaign translated directly into financial results. Spotify Technology reported earnings of $5.16 per share, far above expectations, with revenue rising 7% year over year to $5.28 billion.
User growth was the headline driver. Monthly active users climbed 11% to 751 million, including a record 38 million net additions in the quarter, well ahead of guidance. Premium subscribers rose 10% to 290 million, confirming Spotify’s global scale continues to expand.
Wrapped played a major role by turning users into marketers. The campaign fueled social sharing and engagement, while an enhanced free tier helped bring in new users across regions. The result was strong top line momentum even as monetization showed some pressure.
Margins still improved despite softer pricing trends. Gross margin increased to 33.1%, operating income jumped 47% to 701 million euros, and free cash flow reached 834 million euros. Spotify ended the quarter with a sizable cash position of 9.5 billion euros.
There were a few tradeoffs beneath the surface. Premium ARPU dipped about 3% year over year and ad supported revenue declined 4%, showing growth came more from scale than pricing. Management has already started addressing this with U.S. price hikes that lifted the base plan to $13 per month.
Looking ahead, Spotify expects steady but slower growth in early 2026. The quarter marked an early win for new co CEOs Gustav Söderström and Alex Norström, reinforcing investor confidence that engagement driven products can still deliver outsized shareholder returns.
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