Spotify Q3 2025 Earnings: 713M Users, 281M Subs, Rising Profits

Spotify Q3 2025 earnings report this morning highlighted solid user growth, improving margins and a sharpened focus on long-term monetization. Key subscriber and revenue metrics met or beat analyst expectations.

Spotify’s Q4 positive profit forecast also beat Wall Street expectations amid growing speculation that more price hikes are eminent.

Spotify Q3 2025 Earnings: 713M Users, 281M Subscribers and Rising Profits

Spotify’s Q3 2025 results showcase a company hitting scale, converting users to paying customers and tightening its cost structure.

For creators, labels and partners, the message is clear: the platform remains is a growth engine — but one that is now finally more focused on monetization and margin improvement. The free tier may not grab headlines like premium subscriber numbers. But for better or worse, it remains the foundation of Spotify’s global reach and long-term upward funnel to paid users.

User base: Premium and Free tiers

• Spotify reached 713 million monthly active users (MAUs) in Q3, up 11 % year-on-year.
• Premium subscribers climbed to 281 million, up 12 % year-on-year.
• 432 million used the ad-supported/“Free tier”

This user growth profile underscores Spotify’s continued ability to scale both its free and paid propositions while converting a meaningful base into subscription revenue.

Spotify Q3 2025 Earnings: Revenue and Profitability

• Total revenue for the quarter rose 12 % Y/Y on a constant currency basis, to $4.94B
• Gross margin improved by 56 basis points year-on-year, to 31.6 %.
• Operating income hit $669 million.

These results signal not only growth, but increasing efficiency: the company is slowly but steadily turning incremental user gains into improved margins and profitability.

In a statement to shareholders CEO Daniel Ek emphasized that the business is “healthy… we’re shipping faster than ever… we have the tools we need – pricing, product innovation, operational leverage, and eventually the ads turnaround – to deliver both revenue growth and profit expansion.”

What this means for Free vs Premium

It may be a hard pill to swallow for artists and labels concerned with current payouts, but 11 % growth in MAUs shows that Spotify’s free tier is still expanding briskly. That’s important for Spotify because the free base fuels discovery, data, engagement and — ultimately — conversion.

Premium growth of 12 % is strong, especially in a mature industry. With 281 million paying users, the company is deep into scale. While Spotify did not share specific numbers, premium growth slightly outpacing MAU growth, implies that paid conversion ratio is slowly improving.

The free tier remains critical to Spotify: it provides reach, network scale and the ad platform. Future margin expansion will hinge in part on how well Spotify can monetize free users via ads while converting them to premium.

Key Takeaways for Artists & Labels

With 700 + million MAUs, Spotify is firmly among the largest audio platforms globally. That gives creators and labels a huge audience funnel to tap.

• For emerging markets, growth segments and long-tail discovery, the free ad-supported model remains crucial. For creators, it means that new audiences continue to come in via the free side and low priced paid tiers that reflect local economic conditions.
• Creators and rightsholders should watch how Spotify balances free access for mass reach) with paid upgrades (for deeper monetization.
• Label execs and distributors should pay attention to where margin expansion stems from — whether from ARPU increases, product tiers (audiobooks, premium add-ons) or ads optimization.

graphic via Spotify

Bruce Houghton is Founder & Editor of Hypebot, Senior Advisor at Bandsintown, a Berklee College Of Music professor and founder of Skyline Artists.