Spotify Technology S.A. SPOT

Spotify surpassed 700 million Monthly Active Users (MAU) in Q3 FY25, reaching 713 million and exceeding guidance by 3 million. This growth was significantly driven by the global rollout of an enhanced free experience, which is having a substantial impact on engagement and retention. Users are spending more days and hours on Spotify across all markets and formats, indicating the effectiveness of the company's multi-format strategy in driving both user acquisition and deeper engagement.

The company demonstrated accelerated execution, shipping over 30 new core features in recent months, surpassing the total for the previous year. Key launches include Lossless audio for Premium users, a new in-app messaging feature with nearly 25 million users and 200 million messages sent, and a native Apple TV app developed using AI to reduce costs. Spotify is also leveraging AI for enhanced personalization, such as generative recommender systems, and expanding its ubiquity strategy through integrations like ChatGPT and Meta Ray-Bans, enabling new user control and discovery.

Spotify continues to see strong performance across its music, podcast, and audiobook verticals. Video podcasts now attract over 390 million streamers, a 54% year-over-year increase, with almost 500,000 shows on the platform. In audiobooks, Spotify has expanded to 14 global markets, tripling its English catalog to over 500,000 titles. The number of people listening to audiobooks rose 36% year-over-year, with listening hours increasing even more, supported by the recent launch of Audiobooks+ add-on subscriptions.

The advertising business is undergoing a strategic transformation, reporting mid-single-digit constant currency growth on a like-for-like basis in Q3 FY25. Management acknowledges 2025 as a transition year, with robust growth anticipated to return in the second half of 2026. This recovery is expected to be driven by the ongoing shift to programmatic sales, which is showing good progress, and new DSP partnerships with Amazon and Yahoo, which provide advertisers with programmatic access to both audio and video inventory.

Spotify finalized new modernized licensing deals with all top 5 U.S. publishers, which are described as win-win agreements that better recognize songwriter value and secure broader video rights for Spotify. These rights are critical for enabling further product innovation and expanding the ecosystem. Additionally, a partnership with Netflix was announced to distribute some Spotify Studios and The Ringer video podcasts, aiming to expand creator reach and monetization opportunities while driving incremental usage back to Spotify.

Daniel Ek will transition to Executive Chairman on January 1, with Alex Norström and Gustav Söderström stepping into co-CEO roles. The leadership team is aligned on an increased ambition to reach 1 billion subscribers, leveraging the platform's strong user fundamentals and expansive total addressable market across music, podcasts, and audiobooks. The company emphasizes optimizing for lifetime value through smart investments in product and business, expecting to deliver extraordinary results by compounding these efforts.