Spotify Stock Jumps 10% After Q3 Earnings as Premium Subscribers Hit 306 Million and Q4 Profit Outlook Beats Estimates

Spotify Technology reported third-quarter 2026 results on October 22, with total revenue growing 16% year-over-year to €4.97 billion, just shy of the €4.98 billion consensus estimate. Premium subscribers reached 306 million, up 9% year-over-year and 1 million ahead of the company's own guidance, adding 6 million net new paying subscribers in the quarter. Monthly active users rose 11% year-over-year to 788 million, essentially in line with estimates.

Gross margin hit a record 33.0%, up 136 basis points year-over-year and slightly ahead of the 32.9% estimate, driven by cost optimization and improved music and podcast unit economics. Premium ARPU climbed 9.3% year-over-year to €4.95. Operating income rose 15% to €672 million, just below the €680 million estimate. Diluted EPS of €2.48 missed the €2.81 consensus and fell from €3.28 a year earlier, partly because social charges ran €13 million above forecast at €22 million for the period. Net income was €518 million against a €589 million estimate, and free cash flow fell 9% year-over-year to €735 million.

For the fourth quarter, Spotify guided operating income of €820 million, above the analyst average of roughly €803 million to €813 million, and projected 316 million premium subscribers, ahead of the 314.72 million Wall Street expected. Q4 revenue guidance of €5.2 billion came in slightly below the €5.23-5.24 billion consensus, and the 818 million MAU forecast was just under the 819 million estimate. The company attributed its confidence in the outlook to AI-powered personalization features, including the newly launched Taste Profile for US premium subscribers and Creator Memberships for podcast creators. Spotify has repurchased $1.1 billion of its own shares year-to-date through October 21.

Shares initially rallied about 5% in premarket trading and extended gains through the session, reaching roughly $579, a gain of approximately 10% on the day, putting Spotify among the biggest premarket movers alongside Tesla and Meta.