The news: Spotify added 38 million new users in Q4, a quarterly record, reaching an all-time high of 751 million monthly active users (MAUs), per its latest earnings report.
Revenues hit $5.11 billion, above analysts’ expectations of $5.10 billion and up 7% YoY. In response to the results, Spotify’s stock price jumped, with shares up about 15% the day after earnings.
The caveat: Advertising continues to underperform despite management optimism.
The company remains optimistic that advertising will pick up in 2026, albeit slowly, with co-CEO Alex Norström stating that the platform has a record level of advertisers. “That increased density means much better yield and, as a result, revenue growth for us. … We still have work to do, but we are definitely making good progress,” he said on the company's earnings call.
That slow growth could accelerate in the US over the next year—we expect Spotify’s ad revenues will increase 7% YoY in 2027, up from 3.4% in 2025.
What it means: Subscription growth is doing the heavy lifting as users engage with new features and convert to paid plans. Subscription revenues are also being supported by price hikes, including a US price increase in January—its third in three years—of $1 to $2 per month. This should provide a revenue bump in 2026, even if ad growth stays soft.
Ad revenues could be failing to keep pace if Spotify is optimizing ad inventory and balancing user experience with monetization—like fewer intrusive ads and better ad targeting. That can pressure short-term revenues but support long-term engagement and paid conversion.
Recommendations for brands: Spotify’s ad business creates near-term opportunities for marketers willing to experiment.
- Capitalize on soft ad revenues, which could mean better pricing and less competition than in the future.
- Focus on quality over volume by using contextual targeting.
- Use 2026 as a testing year by experimenting with content formats, including audiobooks and podcasts.