Spotify Q3 2026: Revenue Tops Estimates but EPS Streak Ends

Spotify's third quarter snapped a four-consecutive-quarter run of earnings beats, with GAAP diluted EPS of $2.79 missing expectations against a consensus of $2.85. Part of that shortfall traces to Social Charges on share-based compensation tied to share price movement during the quarter.

Revenue told a stronger story: total revenue reached $5.58 billion, landing above consensus and rising year over year. Premium segment revenue grew on subscriber growth and higher average revenue per user, reflecting the impact of price increases.

Net income fell to $581.86 million from the year-ago quarter, but the comparison is distorted by one-time finance income and a tax benefit that padded Q3 2025 results and did not repeat. Gross margin reached a record 33.0% for a third quarter, a cleaner signal of how the monetization engine is performing.

For the fourth quarter, Spotify guided to operating income of approximately 820 million euros, with revenue and gross margin growth to match. The company expects net monthly active user additions to bring the total to 818 million, and new Premium subscribers to reach 316 million, with a foreign exchange tailwind embedded in those figures.

Year to date through October 21, Spotify repurchased $1.1 billion in shares under a program aimed at neutralizing dilution from employee equity and returning excess cash. Free cash flow for the quarter came in at $825.61 million even as operating income rose, a dynamic investors will want to monitor as marketing and cloud spending continue to scale.