Spotify (SPOT) stock rose on Thursday after reporting Q3 earnings, which showed premium subscribers grew 9% year over year and that artificial intelligence is becoming a key part of its strategy.
The streaming giant posted revenue of nearly €5 billion (about $5.6 billion), roughly in line with expectations. Premium subscriptions and ad-supported drove results, up 17% and 10%, respectively. Earnings per share came in below expectations at €2.48 (about $2.78), less than the €2.80 (about $3.14) expected. Gross margin came in at a record 33%, just above the 32.9% Wall Street expected.
“We’re very pleased with how we’re tracking into the end of 2026. It’s too early to give guidance on 2027… We are well positioned to continue compounding growth, profitability and free cash flow,” CFO Christian Luiga told investors.
Spotify stock rose nearly 9% during Thursday’s trading session, a welcome recovery after falling 6% so far this year.
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Monthly active users were up 11% year over year to 788 million. For the fourth quarter, Spotify expects to reach 818 million. Revenue is also expected to grow by about 15%.
During the quarter, the company focused on using AI to create a more personalized experience, including a taste profile for US premium users to give insight into their music style. It also launched integration with Meta’s Muse.
“It is very valuable when someone creates Spotify content through these third-party agents using their personal context about their life. That just makes Spotify more valuable,” CEO Gustav Söderström said on a call with investors, calling it a tailwind.
Investors raised concerns around how the relationship with the customer could change as Muse, or other personal assistant AI agents like Instinct, could cross-compare prices, offerings and usage. Söderström dismissed the concern, comparing Muse to previous partnerships.
“People have been using Spotify through Google Maps and Waze during their commute for years. That has been tremendous growth for us because Spotify and its business model works in the background. So that was not negative for us. We didn’t get commoditized,” he told investors.
As concerns grow around AI slop, Spotify announced earlier this week that it took more than 50 million slop and spam tracks out of its recommendations and 75 million “spammy tracks” were removed from the platform.
Spotify also plans to expand audiobooks from 22 markets to 180-plus by the end of the year. In the last three years, the company increased its audiobook listenership by 40%.
Brooke DiPalma is a reporter for Yahoo Finance. Follow her on X at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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