Spotify Technology reported third-quarter 2026 results on October 22, 2026, showing that its advertising business grew 9% at constant currency to €482 million, the fastest rate of the year, while the way that money is earned continued to shift. According to the company's quarterly report on Form 6-K, revenue from automated sales channels rose by €91 million year over year, while revenue from the direct sales channel fell by €53 million, mainly because fewer music impressions were sold through it. Total revenue reached €4,969 million, Premium Subscribers climbed to 306 million and monthly active users reached 788 million.

In Short

Spotify earned more money from ads this summer than a year ago, but almost all of the gain came from ads bought through automated systems, while ads sold by its own sales team brought in less. This matters to advertisers and agencies because the cheapest and most flexible way to reach Spotify listeners is now the main way Spotify sells its ad space. Spotify says it expects ad growth to keep climbing toward 10% or more in the last three months of the year.

The quarter in numbers

The figures came in close to what Spotify had forecast three months earlier. According to the shareholder deck dated October 22, 2026, monthly active users grew 11% year over year to 788 million, matching guidance of 788 million. Premium Subscribers grew 9% to 306 million, one million above the 305 million the company had guided to. Net additions were 11 million users and 6 million subscribers.

Revenue rose 16% on a reported basis, or 14% at constant currency. Gross margin reached 33.0%, which the deck describes as a third-quarter record, up 136 basis points from 31.6% a year earlier and 10 basis points above guidance of 32.9%. Operating income of €672 million beat guidance of €670 million and produced an operating margin of 13.5%, a fraction below the 13.6% recorded in the third quarter of 2025.

Social charges, payroll taxes tied to the value of share-based compensation, weighed on the result. According to the deck, they totalled €22 million, €13 million above forecast because of share price movements during the quarter. Spotify does not build share price changes into its guidance. Excluding that overage, according to the prepared remarks of chief financial officer Christian Luiga, operating income came in "€15 million above guidance, driven by favorability in marketing and personnel related costs and Gross Margin outperformance."

Free cash flow was €735 million, down from €806 million a year earlier, which Luiga attributed to "unfavorable timing effects in working capital and cash taxes." Trailing twelve-month free cash flow reached €3.2 billion. The company held €9.9 billion in cash and cash equivalents, restricted cash and short-term investments and, after its Exchangeable Notes matured on March 15, 2026, has no debt other than lease liabilities. The workforce stood at 7,284 full-time employees.

Net income attributable to owners of the parent was €518 million, compared with €899 million a year earlier, according to the 6-K. The prior-year quarter benefited from a €202 million tax benefit linked to the acceleration of US Section 174 research and development deductions and €197 million in fair value movements on the Exchangeable Notes recognised in finance income. Neither recurred. Basic earnings per share fell to €2.52 from €4.36. According to Investing.com, earnings per share of $2.48 missed a consensus forecast of $2.84, while revenue of $4.97 billion was $10 million short of estimates; the publication reported that the shares nonetheless rose 6.98% in premarket trading to $562 from a previous close of $525.34.

Advertising: growth returns, but through different pipes

Spotify has spent most of 2026 explaining that its advertising business was being rebuilt. The third quarter is the first in which that rebuild shows up clearly in the growth rate. Ad-Supported revenue grew 10% on a reported basis and 9% at constant currency, "up from 3% in each of the first two quarters," according to the prepared remarks of co-chief executive Alex Norström.

The quarterly sequence, as restated in the deck, runs as follows: €437 million in the third quarter of 2025, €511 million in the fourth, €385 million in the first quarter of 2026, €446 million in the second and €482 million in the third. The restatement matters. Effective January 1, 2026, certain revenue-generating activities that had been reported in the Ad-Supported segment were moved into the Premium segment to match the information reviewed by the new co-chief executives. When Spotify first reported its third quarter of 2025, advertising revenue was €446 million. On the restated basis, the same quarter shows €437 million.

Ad-Supported revenue accounted for 10% of total revenue in the quarter, according to the 6-K. Over the first nine months of 2026, it grew only €29 million, or 2%, and made up 9% of revenue. The third quarter therefore carried most of the year's gains so far.

Automated up €91 million, direct down €53 million

The 6-K provides the most detailed breakdown of where the money came from. The year-over-year increase of €45 million in Ad-Supported revenue was "due primarily to an increase in music impressions sold on our biddable offerings, which increased revenue in our automated sales channels by €91 million." That gain was "partially offset by a decrease of €53 million in our direct channel due primarily to a decrease in music impressions sold through the channel."

The nine-month figures show the same shape on a larger scale. Automated sales channels added €211 million, while the direct channel lost €177 million. Put differently, the automated side added more than seven times as much as the net growth of the whole ad business over that period, a calculation by PPC Land based on the filing.

Both channels price inventory per thousand impressions, or CPM, but they are bought differently. According to the filing, direct arrangements with agencies and large advertisers are typically sold on a cost-per-thousand impressions basis and "are evidenced by an insertion order." Automated sales channels include "both internal and external advertising automated exchanges, our self-serve platform, and advertising marketplace programs to distribute advertising inventory for purchase on a biddable auction or fixed CPM basis."

Pricing remains an open point. According to the deck, music advertising performance "was driven by growth in impressions sold, partially offset by softness in pricing." In other words, Spotify sold more ad slots in music but at lower average prices, a pattern consistent with a shift toward auction-based buying.

How large is biddable now?

The share of revenue coming through auctions is described differently depending on the document. A chart in the deck tracks "Auction-Based Revenue", defined in a footnote as "biddable sales within the Spotify Ad Exchange and Spotify Ads Manager", as a percentage of trailing twelve-month Ad-Supported revenue. The chart carries no data labels; its line rises from below 10% in the third quarter of 2023 to roughly a third by the third quarter of 2026.

During the question-and-answer session, Luiga gave a higher figure. According to a transcript of the call published by Investing.com, he said progress toward double-digit growth "is driven by biddable, which is now up to 40%, and also podcasts." The two numbers are not necessarily in conflict. A trailing twelve-month share smooths out earlier quarters in which biddable sales were smaller, while Luiga appeared to describe the current run rate. When Spotify reported its second quarter of 2026, Luiga said automated channels had represented nearly 40% of Ad-Supported revenue, up from just over 30% three months earlier. In the first quarter, biddable programmatic sales were described as accounting for more than one-third of ad revenue.

Podcasts and sponsorships

Podcasts were the other named driver. According to the deck, "Podcasting growth was led by sponsorship gains within our Owned & Licensed portfolio." Norström said in his prepared remarks that "sponsorship products are growing, particularly in podcasts."

Spotify also signed what Norström called "a new multi-year agreement with Joe Rogan, whose show remains the world's most popular podcast." None of the documents disclose the length, value or exclusivity terms of the deal.

The podcast business also helped margins. Ad-Supported gross margin reached 18.7%, up 105 basis points, according to the deck, driven by "Revenue growth alongside favorability in podcast cost structure and Other Costs of Revenue." The 6-K adds that advertising serving costs fell as a percentage of revenue, while streaming delivery costs outpaced revenue growth. Ad-Supported cost of revenue was 81% of Ad-Supported revenue, down from 82%. Music royalty costs in the segment rose €23 million, partly because the prior-year quarter had benefited from changes in estimates for rights holder liabilities.

The filing also explains that payments to podcast publishers whose content Spotify monetizes through the Spotify Audience Network (SPAN) are recorded in cost of revenue. At Spotify's May 2026 Investor Day, the company said podcasts had reached a second consecutive year of profitability, with a long-term path to 40% margins.

What management said about the rebuild

Asked by an analyst how the third quarter tracked against expectations for a second-half inflection, Norström answered: "They are tracking really well against our expectations." According to the Investing.com transcript, he described the internal task as making it "easier and easier for advertisers to buy this special inventory, whether that be by making for easier automated attachment to Spotify or whether that be creating better measurement, or whether that is to broaden the demand for audio specifically, whether it is making easier for folks out there to create audio ads and so on."

Luiga addressed whether advertising could lift Spotify's overall growth rate. "Even if ad support is only 10% of the revenue today, it's much better to have 10% revenue growth or above than having a low single-digit growth," he said, according to the transcript.

Some of the changes affecting the free tier are not about ad sales at all. Answering a question on India and Indonesia, Norström said Spotify was making changes that include "better data hygiene in our sign-up flows, ad load adjustments, and effort around migrating users from lower-end device clients over to a better client." He did not specify the direction of the ad load adjustments.

Subscribers, ARPU and the Premium engine

Premium remains where nearly all of Spotify's revenue is earned. Premium revenue rose 17% on a reported basis to €4,487 million, or 15% at constant currency, and accounted for 90% of total revenue, according to the 6-K.

Premium average revenue per user was €4.95, up 9.3% reported and 7.5% at constant currency. The filing breaks down the €0.42 increase: price increases added €0.48, foreign exchange added €0.08, and changes in product and market mix subtracted €0.14. Spotify's freemium model depends on converting free listeners into paying ones, and Norström used part of his prepared remarks to lay out how far that conversion still has to run.

"Sweden is a clear demonstration of how high the opportunity can go," he said. "In our first and most established market, nearly 50% of the population pays for Spotify. Globally, that figure is still under 4%. In key markets like the UK and Germany, it's between 20 to 25%. Latin America is around 11%, and across emerging markets we're less than 3%."

He also cited the company's record since its listing. "When we went public in 2018, we had 71 million subscribers. Since then, every single year, we've added 25 million subs or more, and this year we expect to reach 316 million subscribers."

The 6-K attributes subscriber growth to free trial offers and global campaigns, which were "meaningful contributors of total gross additions," along with Family and Duo plans. That reliance on promotions shows up in costs. Sales and marketing expense rose €57 million, or 16%, including €36 million more for marketing campaigns and €12 million more for providing free trials.

Family Plan verification

One analyst asked about reports that Spotify was cracking down on Family Plan members who do not live with the plan manager. In October, reports emerged that Spotify had begun asking some Premium Family members to verify their address by scanning a QR code, with members who miss the scan barred from joining another Family or Duo plan for 12 months. According to the transcript, Norström said: "this is not as much a crackdown as it is actually a routine improvement of our verification methods for our Family Plan." He added that the Family Plan "makes up a pretty significant proportion of our subscriber base" and that the process "is not something that has an end date." He gave no figures on financial impact or markets.

Costs: cloud, AI and marketing

Operating expenses rose about 26% year over year to €967 million. Stripping out currency and social charges, the increase was 19%, "primarily driven by an increase in marketing alongside cloud and AI spend in support of growth initiatives," according to the deck.

Research and development costs rose €108 million, or 35%, according to the 6-K. Of that, €58 million came from information technology costs, "due primarily to an increase in cloud and AI costs," and €21 million from social costs on share-based compensation. The filing lists a service agreement with Google for the use of Google Cloud Platform among Spotify's non-cancelable purchase commitments. General and administrative expense rose €33 million, or 30%, including €9 million more in legal fees.

Norström had told investors that 2026 would be a year of investment, with operating expense growth "peaking in Q3 and moderating from Q4 on." Luiga said in his prepared remarks that "Opex growth is now coming down meaningfully, and we expect that moderation to continue into 2027." He also said AI investments had "accelerated feature shipping while keeping headcount flat."

Agents and the "background" business model

Co-chief executive Gustav Söderström spent much of his time on AI agents. Spotify launched an integration with Muse, Meta's AI agent, during the quarter. According to the deck, listeners can ask their agent to "play music, save songs to their Library, build personalized playlists, find new books, podcasts and more." Söderström said Spotify had been the first service available in ChatGPT, was integrated into Meta Ray-Bans and OpenAI's Dots, and was "the only media service integrated into Meta's Muse at launch."

His argument for why this does not threaten the business rests partly on advertising. "Spotify - unlike most companies - can 'monetize from the background,'" he said in the prepared remarks. "Whether you are a premium user or a free user listening to our audio ads, our business model not only works, but thrives, while Spotify is in the background."

Analysts pressed the point. Asked whether agents such as Muse could turn Spotify into a back-end supplier, Söderström said, according to the transcript: "We are not sending the music or anything to any of these agents. What is happening is you are talking to that agent, which remote controls Spotify in the background." He added that "We are not sending the data to these partners. They are asking us about something. We do the reasoning over everything we know about you and then decide what to play for you."

Answering another question on whether agents might cancel unused subscriptions, he said Spotify has "over 100 million users that use Spotify 28 days of the month," and that "we will never bet on you forgetting about your subscription."

The documents do not say whether audio ads play, or are counted, when Spotify is controlled through a third-party agent, or how listening initiated through agents is attributed for advertisers.

Product signals

The prepared remarks include several engagement figures for new features. "Almost 40 million Premium users now listen to mixed playlists, consumption is growing 90% quarter over quarter, and millions of people create mixes of their own each month," Söderström said of Mixing Tools. Taste Profile, an editable view of how Spotify understands a user's preferences, launched for Premium Subscribers in the US. Managed Accounts for children aged 13 and under are now available in the US, UK, Australia, France, Germany and the Netherlands.

According to the transcript, Söderström said that "tens of millions of people" were now speaking to Spotify in natural language and that the company's Large Taste Model was producing "double-digit growth in discoveries."

Audiobooks, Partner Program and Memberships

Three expansions announced in October feed into the fourth-quarter outlook. On October 7, 2026, Spotify announced that audiobooks would expand from 22 markets to more than 180 by the end of 2026, with more than 350,000 titles spanning over 120 languages, according to the 6-K. The Spotify Partner Program, which pays video podcast creators based on engagement, expanded to more than 35 new markets, including Italy, Spain, Brazil, Mexico, Poland and Colombia. And Creator Memberships, which let eligible podcast creators sell paid memberships directly to fans, launched in 34 markets on October 20, 2026, which Söderström referred to as "two days ago."

None of these products carry advertising directly, but they compete for the same listening time and creator attention. The Partner Program also has a cost: Premium cost of revenue rose €377 million, partly due to "increases in audiobook licensing costs and costs associated with the Spotify Partner Program," according to the 6-K.

On audiobooks, Norström said in the call, according to the transcript, that "We have increased our audiobooks listenership by 40%. This is even before launching to the rest of the world."

Fourth-quarter guidance

Spotify's outlook, given "as of October 22, 2026," calls for:

  • 818 million monthly active users, implying about 30 million net additions;
  • 316 million Premium Subscribers, implying about 10 million net additions;
  • €5.2 billion in total revenue, assuming a currency tailwind of about 230 basis points;
  • gross margin of 33.8%, about 70 basis points above the prior year;
  • operating income of €820 million, including €6 million in social charges based on a third-quarter closing share price of $487.38.

For advertising, Spotify gave no number. "Our advertising business is coming out of a longer period of low single-digit growth. In Q4, we expect to continue our progress towards double-digit growth," Luiga said. The 6-K notes that the Ad-Supported segment typically sees higher revenue in the fourth quarter "due to greater advertising demand during the holiday season."

Luiga said fourth-quarter ARPU should grow 4.5% to 5% year over year, "driven by recent pricing actions and the performance of our Audiobooks Plus add-on, partially offset by the lapping of prior year pricing actions across more than 150 markets." The gross margin outlook "includes the initial investments in the expansion of Audiobooks to more than 180 markets and the Spotify Partner Program to more than 50 markets." Together with the first nine months, that implies full-year gross margin expansion of about 130 basis points over 2025.

Buybacks and a pending royalty lawsuit

Through October 21, 2026, Spotify had repurchased 2.2 million shares for $1.1 billion during the year, according to the deck. Since resuming buybacks in August 2025, it has bought back about 3 million shares, roughly 1.5% of shares outstanding. On August 20, 2026, the board approved an additional $1.5 billion for the program, and about $1,880 million remained available as of September 30, 2026, according to the 6-K.

The filing also updates the lawsuit brought by the Mechanical Licensing Collective in May 2024 over how Spotify reports mechanical royalties for its Premium bundle, which includes audiobook listening hours. The original suit was dismissed with prejudice on January 29, 2025, and the MLC filed an amended complaint on October 1, 2025. If the MLC were entirely successful in arguing that Premium is not a bundle, the liability for March 1, 2024 to September 30, 2026 "would be approximately €538 million, plus potential penalties and interest," according to the 6-K, partially offset by direct deals with publishers.

Why this matters for advertisers

For buyers, the clearest signal in these results is the channel mix. A business where automated channels grew by €91 million in a single quarter while direct sales shrank by €53 million is one where more of the inventory is reached through demand-side platforms and Spotify's own self-serve tool than through insertion orders. Spotify has been building that route for more than a year. It launched the Spotify Ad Exchange and generative AI creative tools on April 3, 2025, and at its May 2026 Investor Day described an ad platform built around two engines: high-impact sponsorships and scaled biddable channels.

Distribution deals followed. In July, Amazon DSP added Spotify podcast inventory to an integration that had covered music since October 2025, along with programmatic guaranteed and open auction options. In June, IAS announced episode-level pre-bid controls for Spotify podcasts through The Trade Desk. In October, Spotify Ad Exchange inventory arrived in Walmart DSP for eligible US advertisers, with the option to apply Walmart's first-party audiences.

The trade-off is visible in the "softness in pricing" that the deck acknowledges for music. Selling more impressions at lower prices through auctions has restored growth, but it has not yet produced double-digit growth, and the direct channel, where Spotify historically sold premium packages, is shrinking. Sponsorships, especially in podcasts, are the part of the business Spotify points to as the counterweight, and they sit outside the auction.

For publishers and podcast networks, the numbers raise a separate question. Spotify is now the distribution point, the ad seller, a creator payment platform through the Partner Program and Memberships, and a buyer of exclusive shows such as Joe Rogan's. The Ad-Supported segment's improved margin was helped by "favorability in podcast cost structure", which the documents do not quantify.

Timeline

Summary

Who: Spotify Technology S.A., its co-chief executives Alex Norström and Gustav Söderström, and chief financial officer Christian Luiga, along with the advertisers, agencies, podcast creators and subscribers affected by the results.

What: Spotify reported third-quarter 2026 revenue of €4,969 million, 788 million monthly active users and 306 million Premium Subscribers. Ad-Supported revenue grew 9% at constant currency to €482 million, with automated sales channels up €91 million and the direct channel down €53 million year over year. Gross margin reached 33.0% and operating income €672 million.

When: The results were published on October 22, 2026, covering the quarter ended September 30, 2026. Guidance covers the fourth quarter ending December 31, 2026.

Where: Spotify is headquartered in Luxembourg and operates in 184 countries and territories; the results were published through its investor website and a Form 6-K filed with the US Securities and Exchange Commission.

Why: Spotify has been rebuilding its advertising business around automated, auction-based buying and sponsorships after a long period of low single-digit growth. The third quarter is the first in which that shift produced a clear acceleration, although music ad pricing softened and the direct sales channel continued to shrink. The company expects further progress toward double-digit ad growth in the fourth quarter.