Spotify’s Third Quarter Hits a High Note With Record Profits
Yet, the company isn't so optimistic about how the next quarter is going to turn out.
• Spotify rebounded from an €86 million loss last quarter to post a massive €899 million profit in Q3 2025.
• The turnaround was driven by new app features, smarter ad partnerships, and stronger user engagement.
• Despite the gains, Spotify issued cautious Q4 guidance that fell short of analyst expectations.
Analysts weren’t expecting a chart-topper, but Spotify’s Q3 2025 results delivered just that.
Last quarter, Spotify's numbers had investors worried. The company had grown its user base adding about 8 million new subscribers, but profits were slipping with over €86 million reported in loss for the quarter. It raised eyebrows because Spotify had been on a steady growth path, but that loss hinted that profitability might still be a tricky goal.
Fast forward a few months, and the story couldn’t look more different. In its third quarter of 2025, Spotify stunned investors by swinging to a €899 million net profit, an incredible turnaround from just one quarter ago, and roughly a 200%+ jump compared to the same period last year, when profits were around €300 million. As CEO, Daniel Ek put it, “The business is healthy. We’re shipping faster than ever.”
How Spotify Pulled It Off
Part of this success comes down to how Spotify has been improving its core platform experience. The company rolled out over 30 new features and updates for both free and paid users. We’ve seen things like playlist-mixing tools, the long-awaited lossless audio, in-app messaging, and even a ChatGPT-powered integration that offers personalised music and podcast recommendations.
The free tier, in particular, got a major upgrade. For the first time, users could pick and play specific songs instead of relying solely on shuffled playlists, a move that boosted engagement and helped draw more people into the paid Premium tier.
At the same time, Spotify expanded its advertising and business partnerships. It launched new programmatic ad integrations with Amazon DSP, Yahoo DSP, and ID5, helping brands better target and measure their campaigns. These moves are already paying off with improved conversion rates and reduced costs per action, especially in Europe.
More recently, Spotify struck a new deal with Netflix to bring its original podcasts, like The Bill Simmons Podcast and The Rewatchables, to Netflix globally starting in 2026, a move that could expose its shows to a much wider streaming audience. The company also began working with major record labels, Sony Music, Universal, and Warner, on new AI-powered music tools designed to improve discovery, personalisation, and how artists connect with listeners.
Together, these moves have strengthened Spotify’s ecosystem, blending better content, smarter recommendations, and new ad opportunities, and the results are already showing.
MORE INSIGHTS ON THIS TOPIC:
- Despite adding over 8 million premium subscribers, Spotify ended Q2 2025 at a loss
- How Amazon Revived Investor Confidence in Q3 2025
- CHART: Spotify posts record profit in Q2 '24 amid efficiency measures and subscription price hikes
The Numbers Behind the Momentum
All these updates, from app redesigns to ad tech upgrades, have started to translate into real results for Spotify. The platform’s reach continues to grow, with monthly active users climbing 11% year-on-year to 713 million, comfortably above analyst expectations of 707 million.
On the paid side, Premium subscribers rose 12% to 281 million, just shy of the 282 million analysts had projected. Revenue came in at €4.27 billion, narrowly beating forecasts of €4.23 billion, and operating income of €582 million easily topped the €535 million expected.
Even though ad-supported revenue slipped 6% due to softer pricing, Spotify’s growing library of features and smarter ad integrations helped cushion the blow. If anything, these numbers show that even with price hikes in multiple regions, people still see value in sticking with the service.
A Strong Quarter, But a Cautious Outlook
Still, despite its blockbuster quarter, Spotify isn’t exactly overly optimistic about the next one. The company expects Q4 revenue of about €4.5 billion, which is a little below analyst forecasts of roughly €4.56 billion, and projects Premium subscribers to reach 289 million, slightly under the 291 million analysts had anticipated.
That conservative outlook saw Spotify’s stock dip around 2% after the earnings release, as investors tempered their excitement with a bit of caution. The company also announced that Daniel Ek will step down as CEO in early 2026, transitioning to executive chairman, with Gustav Söderström and Alex Norström set to take over as co-CEOs, a leadership shift that could shape Spotify’s next growth chapter.
Conclusion
For now, though, Spotify’s latest quarter feels like a statement of confidence. It’s proof that the company can bounce back fast, even after a rough patch. The focus on AI, smarter ads, and better user experiences seems to be pushing Spotify into a more sustainable phase of growth, one that’s not just about user counts, but about long-term profitability.
Even if growth cools a bit next quarter, Spotify’s turnaround this year proves it’s far from running out of rhythm, and perhaps just hitting a new beat.
