Spotify hits 751 million users as new co-CEOs take the helm

Swedish music streaming company Spotify reached a record 751 million monthly active users in the fourth quarter, representing an 11% increase from a year earlier. The company added 38 million new users during the fourth quarter, while its paying subscriber base increased by 10% to reach 290 million. This growth milestone coincides with a leadership transition, as co-founder Daniel Ek hands over the reins of the company to new co-CEOs Gustav Söderström and Alex Norström. The incoming co-CEOs will now oversee a business that has expanded beyond its music-streaming model.

Financially, the company reported top-line growth alongside shifting margin dynamics. Total revenue reached €4.53 billion ($5.39 billion), which is about 7% more than a year earlier, supported by an 8% increase in subscription revenue. However, performance was mixed across segments, as ad-supported revenue dipped by 4% to €518 million ($616.6 million). Despite the advertising decline, Spotify’s gross margin—an important metric for profitability—improved by 83 basis points, or 0.83 percentage points, to reach 33.1%.

Key financial metrics for the quarter include:

• Total Revenue: €4.53 billion ($5.39 billion), up about 7% year-over-year.
• Subscription Revenue: Increased by 8% year-over-year.
• Ad-Supported Revenue: €518 million ($616.6 million), representing a 4% decline.
• Gross Margin: Improved by 83 basis points (0.83 percentage points) to 33.1%.

Much of the quarter’s user engagement was driven by Spotify’s annual “Wrapped” campaign. The year-end campaign resulted in more than 300 million engaged users and generated 630 million shares on social media across 56 languages. To sustain this momentum and compete with rivals like YouTube Music and Amazon Music, Spotify has pursued a broader strategy of adding new features. This includes introducing social features like group chats, letting users share what they are listening to, and launching AI-powered features such as an AI DJ and AI-generated playlists. To improve profitability, Spotify has also raised subscription prices in the U.S. and Europe while adding new features to its free, ad-supported tier to attract users, letting them search for and choose songs they want to listen to.

Looking ahead, the company expects to maintain its growth trajectory. For the current quarter, Spotify expects to reach 759 million monthly active users and 293 million paying subscribers.

Why it matters

Spotify’s record user growth and improved gross margin highlight the company’s ongoing shift toward profitability and diversification beyond music streaming, even as its ad-supported business faces a slight decline.