Q3 2026 Spotify Technology SA Earnings Call

October 22, 2026

Speaker #1: I can't drive my own pure reflection when I'm blinded by your reflection. I can't drive my own pure reflection. I did today and welcome

Operator: Good day, and welcome to Spotify's Q3 2026 earnings call and webcast. All participants are in a listen-only mode. If you require operator assistance at any time, please press star zero. As a reminder, this conference call is being recorded. I would now like to turn the call over to Bryan Goldberg, Head of Investor Relations. Thank you. Please go ahead.

Speaker #2: to Spotify's third quarter 2026 earnings call and webcast. All participants are on a listen-only mode. If you require operator assistance at any time, please press star zero.

Speaker #2: As a reminder, this conference call is being recorded. I would now like to turn the call over to Brian Goldberg, Head of Investor Relations.

Speaker #2: Thank you. Please go ahead.

Bryan Goldberg: All right. Thanks, operator, and welcome to Spotify's Q3 2026 earnings conference call. Joining us today will be our Co-CEOs, Alex Norström and Gustav Söderström, and our CFO, Christian Luiga. We will start with opening comments from the team, and afterwards, we will be happy to answer your questions. Questions can be submitted by going to slido.com, S-L-I-D-O dot com, and using the code hashtag Spotify Earnings Q3 26. Analysts can ask questions directly into Slido, and all participants can then vote on the questions they find the most relevant. If for some reason you do not have access to Slido, you can email investor relations at ir@spotify.com and we will add in your question. Before we begin, let me quickly cover the safe harbor. During this call, we will be making certain forward-looking statements, including projections or estimates about the future performance of the company.

Speaker #3: All right. Thanks, operator, and welcome to Spotify's third quarter 2026 earnings conference call. Joining us today will be our co-CEOs, Alex Norstrom and Gustav Söderström, and our CFO, Christian Luiga.

Speaker #3: We'll start with opening comments from the team, and afterwards we'll be happy to answer your questions. Questions can be submitted by going to slido.com/slido.com and using the code #SpotifyEarningsQ326.

Speaker #3: Analysts can ask questions directly into Slido and all participants can then vote on the questions they find the most relevant. If for some reason you don't have access to Slido, you can email investorrelations@ir@spotify.com and we'll add in your question.

Speaker #3: Before we begin, let me quickly cover the safe harbor. During this call, we'll be making certain forward-looking statements, including projections or estimates about the future performance of the company.

Bryan Goldberg: These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors discussed on today's call, in our shareholder deck, and in filings with the Securities and Exchange Commission. During this call, we will also refer to certain non-IFRS financial measures. Reconciliations between our IFRS and non-IFRS financial measures can be found in our shareholder deck, in the financial section of our investor relations website, and also furnished today on Form 6-K. And with that, I will turn it over to Alex.

Speaker #3: These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could differ materially because of factors discussed on today's call.

Speaker #3: In our shareholder deck and in filings with the Securities and Exchange Commission. During this call, we'll also refer to certain non-IFRS financial measures. Reconciliations between our IFRS and non-IFRS financial measures can be found in our shareholder deck, in the financial section of our investor relations website, and also furnished today on Form 6K.

Speaker #3: And with that, I'll turn it over to Alex.

Alex Norström: Thank you, Bryan, and hello, everyone. Thanks for joining us. Let me just start with the strength of the quarter. We made several commitments last quarter and they have all landed either in line or better than expected. Our revenue came in right in line with what we guided at about EUR 5 billion, up 14% at constant currency. MAU also landed right on target at 788 million. As we shared last quarter, we are optimizing our MAU growth across markets to scale our funnel and drive revenue growth over time. Subscribers came in ahead at 306 million, beating our guidance by 1 million. That strength shows up where it matters the most. Premium revenue grew 15%, driven by both subscriber growth and higher ARPU. Gross margin also came in ahead of expectations at 33%. This is a significant year-over-year expansion.

Speaker #4: Thank you, Brian, and hello everyone. Thanks for joining us. Let me start with the strength of the quarter. We made several commitments last quarter, and they've all landed either in line or better than expected.

Speaker #4: Our revenue came in right in line with what we guided, at about $5 billion—up 14% at constant currency. MAU also landed right on target at 788 million.

Speaker #4: And as we shared last quarter, we're optimizing our MAU growth across markets to scale our funnel and drive revenue growth over time. Subscribers came in ahead at 306 million, beating our guidance by 1 million.

Speaker #4: That strength shows up where it matters the most. Premium revenue grew 15%, driven by both subscriber growth and higher ARPU. Gross margin also came in ahead of expectations at 33%.

Speaker #4: This is a significant year-over-year expansion. Over the past 12 months, we've generated $3.2 billion in free cash flow. Ads is one of the areas of our business that I've been I've spent time talking about.

Alex Norström: Over the past 12 months, we've generated EUR 3.2 billion in free cash flow. Ads is one of the areas of our business that I've spent time talking about, so I want to share our progress. We've been open with you that we're rebuilding this business, and we said the momentum would start to show in the H2 of the year. In Q3, ads grew 9% at constant currency, up from the 3% in each of the first two quarters. Further, our automated channels continue to scale and sponsorship products are growing, particularly in podcasts. We're moving in the right direction and there's more progress ahead. On OpEx, we told you this would be a year of investment, with operating expense growth peaking in Q3 and then moderating from Q4 and on. That's exactly what's happening.

Speaker #4: So I want to share our progress. We've been open with you that we're rebuilding this business, and we said the momentum would start to show in the second half of the year.

Speaker #4: And in Q3, ads grew 9% at constant currency, up from the 3% in each of the first two quarters. Further, our automated channels continue to scale and sponsorship products are growing, particularly in podcasts.

Speaker #4: We're moving in the right direction, and there's more progress ahead. And on OPEX, we told you this would be a year of investment. With operating expense growth peaking in Q3 and then moderating from Q4 and on, that's exactly what's happening.

Alex Norström: Christian will walk you through the details further, but as we know from experience, investing in our product, features, and brand strengthens our position, and we can see that playing out right now. To build on this further, I'd like to use the rest of my time on what I think is an underappreciated part of our story, durability. When we went public in 2018, we had 71 million subscribers. Since then, every single year, we've been adding 25 million subs or more. This year, we expect to reach 316 million subscribers. As I've mentioned before, very few consumer subscription businesses have ever reached this scale and few are still adding at this pace. Through a pandemic, price increases, and a changing economy and consumer landscape, this steady growth in subscribers hasn't stopped. This quarter, that growth came from every region. That's what durability looks like.

Speaker #4: Christian will walk you through the details further, but as we know from experience, investing in our product, features, and brand strengthens our position, and we can see that playing out right now.

Speaker #4: So, to build on this further, I'd like to use the rest of my time on what I think is an underappreciated part of our story.

Speaker #4: Durability. When we went public in 2018, we had 71 million subscribers. Since then, every single year, we've been adding 25 million subscribers or more.

Speaker #4: And this year, we expect to reach 316 million subscribers. As I've mentioned before, very few consumer subscription businesses have ever reached this scale, and few are still adding subscribers at this pace.

Speaker #4: Through a pandemic, price increases, and a changing economy and consumer landscape, this steady growth in subscribers hasn't stopped. And this quarter, that growth came from every region.

Speaker #4: That's what durability looks like. Looking across the broader subscription landscape, you all know that not all subscribers are created equal. Spotify not only enjoys industry-leaning engagement, but we also have the most passionate and engaged music, podcasts, and book fans in the world on our platform.

Alex Norström: Looking across the broader subscription landscape, you all know that not all subscribers are created equal. Spotify not only enjoys industry-leading engagement, but we also have the most passionate and engaged music, podcast, and book fans in the world on our platform. We're not just an app or a product sitting on a phone, and that's why we continue to grow and take share. Every time we expand what's on Spotify, we bring in new listeners, and we give existing ones more reasons to come back, almost every day. Sweden is a clear demonstration of how high the opportunity can go. In our first and most established market, nearly 50% of the population pays for Spotify. Globally, that figure is still under 4%, and in key markets like the UK and Germany, it's between 20% and 25%.

Speaker #4: We're not just an app—we're a product sitting on a phone. And that's why we continue to grow and take share. Every time we expand what's on Spotify, we bring in new listeners, and we give existing ones more reasons to come back.

Speaker #4: Almost every day. Now, Sweden is a clear demonstration of how high how high the opportunity can go. In our first and most established market, nearly 50% of the population pays for Spotify.

Speaker #4: Globally, that figure is still under 4%. And in key markets like the UK and Germany, it's between 20 and 25%. Latin America is around 11%.

Alex Norström: Latin America is around 11%, and then across emerging markets, we're less than 3%. What makes our position unique is how balanced it is. In developed markets, we're growing a highly engaged monetizing base with a lot more room for growth. In emerging markets, we're still early, with hundreds of millions of subs to come. This is a growth engine that compounds, building a bigger recurring revenue base. This is durability at scale. We also kept adding to what a subscription is worth this quarter. We signed a new multi-year agreement with Joe Rogan, whose show remains the world's most popular podcast, and we added Believe and TuneCore as a partner for remixes and covers. Remixes are as old as music itself, and we're working on a version that fans love and rights holders trust, with consent, credit, and compensation at the core.

Speaker #4: And then, across emerging markets, we're less than 3%. What makes our position unique is how balanced it is. In developed markets, we're growing with a highly engaged, monetizing base, with a lot more room for growth.

Speaker #4: And in emerging markets, we're still early, with hundreds of millions of subs to come. This is a growth engine that compounds, building a bigger recurring revenue base.

Speaker #4: This is durability at scale. We also kept adding to what a subscription is worth this quarter. We signed a new multi-year agreement with Joe Rogan, who's show remains the world's most popular podcast.

Speaker #4: And we added Believe and TuneCore as partners for remixes and covers. Now, remixes are as old as music itself. We're working on a version that fans love and rights holders trust, with consent, credit, and compensation at the core.

Alex Norström: As we have recently announced, we are expanding Audiobooks to more than 180 markets by the end of the year, making Spotify the world's first global audiobook service. This enhances subscriber lifetime value, add-on monetization, and will benefit Spotify around the world. Gustav will share more about this. This was a quarter where we did what we said. We have built a strong business that keeps compounding. We invest when we see a path for growth. Our costs are moderating, and there is more runway ahead. Having seen a preview of this year's Wrapped, I am really looking forward to Q4 with a lot of excitement, and I cannot wait to see how our fans respond. With that, let me hand it over to Gustav.

Speaker #4: And as we've recently announced, we are expanding audiobooks to more than 180 markets by the end of the year, making Spotify the world's first global audiobook service.

Speaker #4: This enhances subscriber lifetime value, add-on monetization, and will benefit Spotify around the world. Gustav will share more about this. So, this was a quarter where we did what we said—we've built a strong business that keeps compounding. We invest when we see a path for growth, our costs are moderating, and there's more runway ahead.

Speaker #4: And I haven't seen a preview of this year's Wrapped, and I'm really looking forward to Q4 with a lot of excitement. I can't wait to see how our fans respond.

Speaker #4: With that, let me hand it over to Gustav.

Gustav Söderström: Thank you, Alex. Alex just spoke about durability at scale, and I want to share how we are creating that. At a recent Investor Day, I talked about two ways to predict the future. You can extrapolate what is already happening, or you can anticipate what is about to change. When the world shifted to mobile in 2007, we needed to do a lot of anticipation, imagining and building for a world that we thought would happen, but that did not exist yet. This worked out well for us, and we accelerated in that new world. For much of the following decade, we and everyone else could instead largely rely on extrapolation on what already existed. That would be more phones, more ads, more catalog, et cetera, which also got us very far.

Speaker #2: Thank you, Alex. So Alex just spoke about durability at scale. And I want to share how we're creating that. So at a recent investor day, I talked about two ways to predict the future.

Speaker #2: You can extrapolate what is already happening, or you can anticipate what's about to change. And when the world shifted to mobile in 2007, we needed to do a lot of anticipation.

Speaker #2: Imagining and building for a world that we thought would happen, but that didn't exist yet. This worked worked out well for us, and we accelerated in that new world.

Speaker #2: For much of the following decade, we and everyone else could instead largely rely on extrapolation of what already existed. So that would be more phones, more ads, more catalog, et cetera.

Speaker #2: Which also got us very far. I don't think it's escaped anyone on this call, but today we are clearly in an era where anticipation is much more important again.

Gustav Söderström: I do not think it has escaped anyone on this call, but today we are clearly in an era where anticipation is much more important again. Today, I want to talk about three things that we anticipated some time ago that are now becoming real, and the effects of those. First up is agents. On our Q4 call back in February, I said that we were building the world's first truly intelligent agentic media platform. That may have sounded a little bit abstract at the time, but it is hopefully becoming clearer now. What we meant was an intelligent media service encapsulated as an agent, whether you use it directly through our application or via another agent. We made a bet that consumers using services like ChatGPT would also start demanding intelligence from their media service. We built for that.

Speaker #2: So today, I want to talk about three things that we anticipated some time ago, that are now becoming real. And the effects of those.

Speaker #2: First up is agents. So on our fourth quarter call back in February, I said that we were building the world's first truly intelligent agentic media platform.

Speaker #2: That may have sounded a little bit abstract at the time, but it's hopefully becoming clearer now. What we meant was an intelligent media service encapsulated as an agent, whether you use it directly to our application or via another agent.

Speaker #2: We made a bet that consumers using services like ChatGPT would also start demanding intelligence from their media service. So we built for that. Spotify is now an agent that you can not only click on in our app, but talk to, ask questions of, and instruct.

Gustav Söderström: Spotify is now an agent that you can not only click on in our app, but talk to, ask questions of, and instruct. We can do things today that no other media services can do. For example, you can ask Spotify to go through your listening history song by song back to 2008, picking your two favorites, beat stretching them by speeding them up or down, and then sorting them by key and BPM. Then you can ask it to mix them together into the perfect running playlist at your exact cadence. That is not all you can do. You can also ask Spotify exactly who wrote and performed what on each track. If you want to shift gears entirely, we can also generate an individual podcast just for you, as well as recap the book you are reading up until exactly where you stopped.

Speaker #2: We can do things today that no other media services can do. For example, you can ask Spotify to go through your listening history, song by song, back to 2008, picking your true favorites, be stretching them by speeding them up or down, and then sorting them by key and BPM.

Speaker #2: Then you can ask it to mix them together into the perfect running playlist at your exact cadence. But that's not all you can do.

Speaker #2: You can also ask Spotify exactly who wrote and performed what on each track. And if you want to shift gears entirely, we can also generate an individual podcast just for you.

Speaker #2: As well as recapping the book you're reading up until exactly where you stopped. As we prepared for this agentic world, we also thought through what our ubiquity strategy would mean in an agentic age.

Gustav Söderström: As we prepared for this agentic world, we also thought through what our ubiquity strategy would mean in an agentic age. Spotify's strategy has always been to be the best experience wherever people listen. As an example, nearly a decade ago, as connected speakers took off, we rebuilt our entire technology stack to make Spotify very easy to integrate across speakers, something called the eSDK. TVs, gaming consoles, and other devices. That investment turned the growth of the connected device industry into a tailwind for Spotify, one that actually continues to pay off even today. For the agentic age, we are betting on consumers using many agents, and that Spotify will be by far the best media platform for licensed content inside and across all these agents. Before most people were regular users, we integrated Spotify into ChatGPT, making Spotify the first service available.

Speaker #2: Spotify's strategy has always been to be the best experience wherever people listen. As an example, nearly a decade ago, as connected speakers took off, we rebuilt our entire technology stack to make Spotify very easy to integrate across speakers, something called the ESDK.

Speaker #2: So TVs, gaming consoles, and other devices—that investment turned the growth of the connected device industry into a tailwind for Spotify, one that actually continues to pay off even today.

Speaker #2: So for the agentic age, we are betting on consumers using many agents. And that Spotify will be by far the best media platform for licensed content inside and across all these agents.

Speaker #2: So before most people were regular users, we integrated Spotify into ChatGPT. Making Spotify the first service available. This was also the case with Meta Ray-Bans, OpenAI's dots, and we were the only media service integrated into Meta's Muse at launch.

Gustav Söderström: This was also the case with Ray-Ban Meta, OpenAI's Dots, and we were the only media service integrated into Meta's Muse at launch. The list goes on and on. We are simply everywhere, so that whenever you find a great song, a book, or a podcast, or even want to create a podcast of your own, it is right there. You just save it, playlist it, and it shows up in Spotify in your morning commute. Importantly, this is not just a technology strategy, it is also a business strategy. We think Spotify is unusually well-positioned for the age of agentic AI. This is because Spotify, unlike most companies, can monetize from the background. 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. This is actually not something new.

Speaker #2: The list goes on and on. We are simply everywhere. So that whenever you find a great song, book, or a podcast, or even want to create a podcast of your own, it's right there.

Speaker #2: You just save it, playlist it, and it shows up in Spotify in your morning commute. Importantly, this is not just a technology strategy. It's also a business strategy.

Speaker #2: We think Spotify is unusually well positioned for the age of agentic AI. This is because Spotify, unlike most companies, can monetize from the background.

Speaker #2: Whether you're 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.

Speaker #2: This is actually not something new. The Spotify app has been in the background of apps like Waze and Google Maps during the commute for decades now.

Gustav Söderström: The Spotify app has been in the background of apps like Waze and Google Maps during the commute for decades now. Zooming out, Spotify is in one of the few categories that actually stands to thrive in the agentic age. This is because agents, as I am sure you know, excel at replacing and taking care of things that people would rather not do, like maybe paying bills, answering emails, booking restaurants, checking your kids' school schedule, et cetera. This is where you see services like Muse absolutely thriving. People love getting rid of chores. But entertainment is the opposite. Nobody asks an agent to summarize a song for them. The whole point of getting rid of these chores is to free up even more time for the things that you actually enjoy.

Speaker #2: Zooming out, Spotify is in one of the few categories that actually stands to thrive in the agentic age. This is because agents, as I'm sure you know, excel at replacing and taking care of things that people would rather not do.

Speaker #2: Like maybe paying bills, answering emails, booking restaurants, checking your kid's school schedule, et cetera. This is where you see services like Muse absolutely thriving.

Speaker #2: People love getting rid of chores. But entertainment is the opposite. Nobody asked an agent to summarize a song for them. The whole point of getting rid of these chores is to free up even more time for the things that you actually enjoy.

Gustav Söderström: The second thing that we anticipated was moving Spotify from a passive and single-player experience to an interactive and multiplayer experience. You know our multiplayer offerings. We have talked a lot about them. Popular features like messaging, Jam, collaborative playlists, and comments. Today I would like to spend a moment on the interactivity side. The original interactive experience on Spotify was, not surprisingly, playlisting. Millions and millions of people put songs together and helped organize the world's music library. That became the foundation of our recommendation engine. Last quarter, I talked about SongDNA as one of our all-time fastest-growing features. This quarter, remixing tools offers another example of what happens when people can do more with their music. We started rolling remixing tools out about a year ago, actually. It was good then. It is much better now. Almost 40 million Premium users now listen to mixed playlists.

Speaker #2: The second thing that we anticipated was moving Spotify from a passive and single-player experience to an interactive and multiplayer experience. You know our multiplayer offerings.

Speaker #2: We've talked a lot about them. Popular features like messaging, Jam, collaborative playlist, and comments. So today, I'd like to spend a moment on the interactivity side.

Speaker #2: The original interactive experience on Spotify was, not surprisingly, playlisting. Millions and millions of people put songs together and helped organize the world's music library.

Speaker #2: That became the foundation of our recommendation engine. Last quarter, I talked about song DNA as one of our all-time fastest growing features. This quarter, mixing tools offers another example of what happens when people can do more with their music.

Speaker #2: We started rolling mixing tools out about a year ago, actually. It was good then. It is much better now. Almost 40 million premium users now listen to mixed playlists.

Gustav Söderström: Consumption is growing 90% quarter over quarter, and millions of people create mixes of their own each month. Well, playlists always told us which songs go well together, but mixing also tells us exactly how and when they fit, down to the millisecond. Those signals improve our Large Taste Model, our recommendations, and what the Spotify agent can do. Better recommendations strengthen retention over time. It also tells us something encouraging about the future of remixing. Give people good tools, and they will invest in shaping the music themselves. The third thing that we anticipated was the opportunity in books. When we first discussed Audiobooks, we said our geography gave us a unique perspective. In Sweden, Audiobooks are almost as big as music, and we wondered whether that was purely Swedish behavior or simply early behavior. What we are seeing now suggests the latter.

Speaker #2: Consumption is growing 90% quarter over quarter, and millions of people create mixes of their own each month. So why does this matter? Well, playlists always told us which songs go well together.

Speaker #2: But mixing also tells us exactly how and when they fit, down to the millisecond. Those signals improve our large taste model. Our recommendations and what the Spotify agent can do.

Speaker #2: Better recommendations strengthen retention over time. It also tells us something encouraging about the future of remixing. Give people good tools, and they will invest in shaping the music themselves.

Speaker #2: The third thing that we anticipated was the opportunity in books. When we first discussed audiobooks, we said our geography gave us a unique perspective.

Speaker #2: In Sweden, audiobooks are almost as big as music. And we wondered whether that was purely Swedish behavior, or simply early behavior. What we're seeing now suggests the latter.

Gustav Söderström: That is why we are expanding Audiobooks. We want to grow the market itself by giving hundreds of millions of people a great, affordable way to listen, not just compete for shares of today's market. When people adopt Audiobooks, they come to Spotify on more days. Audiobooks started as a bet. It is now a global business, and it is still early. All of this connects to how we are building an even stronger subscription business. In addition to the growth of Audiobooks and Premium, we are expanding the Spotify Partner Program, a fan favorite among passionate podcast listeners, to 35 more markets this fall. Two days ago, we launched Creator Memberships, so fans can directly support creators and get member-only experiences. This is another example of capturing the power law that we discussed at our Investor Day back in May. There is a power law within each creator's audience.

Speaker #2: That's why we're expanding audiobooks. We want to grow the market itself by giving hundreds of millions of people a great, affordable way to listen.

Speaker #2: Not just compete for shares of today's market. When people adopt audiobooks, they come to Spotify on more days. Audiobooks started as a bet. It's now a global business, and it's still early.

Speaker #2: All of this connects to how we're building an even stronger subscription business. In addition to the growth of audiobooks and premium, we're expanding the Spotify partner program, a fan favorite among passionate podcast listeners, to 35 more markets this fall.

Speaker #2: And two days ago, we launched Creator Memberships, so fans can directly support creators and get member-only experiences. This is another example of capturing the power law that we discussed at our Investor Day back in May.

Speaker #2: There is a power law within each creator's audience. Some fans want to go deeper and are willing to spend more. And now they can do that right on Spotify.

Gustav Söderström: Some fans want to go deeper and are willing to spend more, and now they can do that right on Spotify. These offerings will add value as they scale. Where we have offered Audiobooks and the Spotify Partner Program the longest, they are contributing to acquisition, retention, active days, and margin improvement. With that, I will hand it over to Christian.

Speaker #2: These offerings will add value as they scale. And where we've offered audiobooks and the Spotify partner program the longest, they're contributing to acquisition, retention, active days, and margin improvement.

Speaker #2: With that, I'll hand it over to Christian.

Christian Luiga: Thank you, Gustav, and thanks everyone for joining us today. I will cover the Q3 results and then provide some perspective on our outlook. Unless otherwise noted, as always, our reference growth metrics are presented on a year-over-year constant currency basis. We have another solid quarter behind us. Starting from the top, MAU grew in line with our guidance of 11 million to 788 million, up 11% year-over-year. We added 6 million net subscribers during the quarter, growing quarter-over-quarter across all regions. We reached 306 million, which was 1 million ahead of our guidance. Our outperformance was broad-based and led by Rest of the World and Latin America. Total revenue was EUR 3.4 billion, growing 14% year-over-year. Premium revenue rose 15% year-over-year, driven by subscriber growth of 9% and ARPU expansion of 7.5%.

Speaker #3: Thank you, Gustav, and thanks, everyone, for joining us today. I'll cover the Q3 results and then provide some perspective on our outlook. Unless otherwise noted, as always, I'll reference growth metrics as presented on a year-over-year constant currency basis.

Speaker #3: We have another solid quarter behind us, starting from the top, MAU grew in line with our guidance of 11 million to 788 million. Up 11% year over year.

Speaker #3: We added 6 million net subscribers during the quarter, growing quarter over quarter across all regions. We reached 306 million which was 1 million ahead of our guidance.

Speaker #3: Our outperformance was broad-based and led by the rest of the world and Latin America. Total revenue was $5 billion euro, growing 14% year over year.

Speaker #3: Premium revenue rose 15% year over year, driven by subscriber growth of 9% and ARP expansion of 7.5%. Ad-supported revenue growth improved to 9%, as Alex said.

Christian Luiga: Ad-supported revenue growth improved to 9%, as Alex Norström said, this quarter led by strong growth in our automated biddable sales channel. Our gross margin came in at 33%, surpassing guidance by 10 basis points and representing year-over-year expansion of around 140 basis points. Operating income of EUR 672 million was a bit above our guidance, delivering on operating margin of 13.5%. Social charges of EUR 22 million were EUR 13 million higher than forecast due to share price movements in the quarter. Excluding the non-forecasted social charges, we came in EUR 15 million above guidance, driven by favorability in marketing, personnel-related costs, and gross margin outperformance. Finally, free cash flow was EUR 735 million in the quarter and included unfavorable timing effects in working capital and cash taxes. Year to date, through 21 October, we have repurchased 2.2 million shares for $1.1 billion US.

Speaker #3: This quarter, led by strong growth in our automated biddable sales channel. Our gross margin came in at 33%, surpassing guidance by 10 basis points and representing year-over-year expansion of around 140 basis points.

Speaker #3: Operating income of $672 million euro was a bit above our guidance, delivering on operating margin of 13.5%. Social charges of $22 million were $13 million higher than forecast due to share price movements in the quarter.

Speaker #3: Excluding the non-forecasted social charges, we came in $15 million above guidance. Driven by favorability in marketing, personnel-related costs, and gross margin outperformance. Finally, free cash flow was $735 million in the quarter and included unfavorable timing effects in working capital and cash taxes.

Speaker #3: Year to date, through October 21st, we have repurchased $2.2 million shares for $1.1 billion USD. This means that we have neutralized this year's dilution from our employee equity programs.

Christian Luiga: This means that we have neutralized this year's dilution from our employee equity programs, and we have also initiated the return of excess cash. Since we resumed our buybacks in August 2025, we have repurchased about 3 million shares, or approximately 1.5% of shares outstanding. Our capital allocation strategy remains focused on attractive return opportunities. First, through organic and inorganic growth initiatives, followed by opportunistic returns to shareholders. As of the close of the quarter, we had $9.9 billion in cash and cash equivalents and no debt other than lease liabilities. Looking ahead to Q4, we are forecasting MAU of 818 million, an increase of 30 million from Q3. Our guidance reflects healthy growth across all regions. Growth is not as high as last year's all-time high, which benefited from a very successful rollout of our new free tier.

Speaker #3: And we have also initiated the return of excess cash. Since we resumed our buybacks in August 2025, we have repurchased about 3 million shares or approximately $1.5% of shares outstanding.

Speaker #3: Our capital allocation strategy remains focused on attractive return opportunities. First, through organic and inorganic growth initiatives. Followed by opportunistic returns to shareholders. As of the close of the quarter, we had $9.9 billion in cash and cash equivalents, and no debt other than lease liabilities.

Speaker #3: Looking ahead to Q4, we are forecasting MAU of $818 million, an increase of $30 million from Q3. Our guidance reflects healthy growth across all regions.

Speaker #3: Growth is not as high as last year's all-time high. Which benefited from a very successful rollout of our new free tier. On subscribers, we're forecasting $316 million for Q4 or a net addition of $10 million.

Christian Luiga: On subscribers, we're forecasting 316 million for Q4, or a net addition of 10 million. We're also forecasting total revenue of EUR 5.2 billion in Q4. This reflects a year-over-year ARPU increase of 4.5% to 5%, driven by recent pricing actions and the performance of our Audiobooks+ add-ons. This is partly offset by the lapping of prior year pricing actions across more than 150 markets. Our advertising business is coming out of a longer period of single-digit growth. In Q4, we expect to continue our progress towards double-digit growth. We anticipate a Q4 gross margin of 33.8%, approximately 70 basis points above prior year. Our 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.

Speaker #3: We're also forecasting total revenue of €5.2 billion in Q4. This reflects a year-over-year ARP increase of 4.5% to 5%, driven by recent pricing actions and the performance of our audiobooks plus add-ons.

Speaker #3: This is partly offset by the lapping of prior-year pricing actions across more than 150 markets. Our advertising business is coming out of a longer period of single-digit growth.

Speaker #3: In Q4, we expect to continue our progress towards double-digit growth. We anticipate a Q4 gross margin of 33.8%. Approximately 70 basis points above prior year.

Speaker #3: Our 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.

Christian Luiga: These rollouts can drive new value for our subscribers and the business, the same way we have seen it over the last 3 years. Taken together with the first 9 months of the year, our Q4 outlook implies a full-year gross margin expansion of approximately 130 basis points compared to 2025. Moving to operating income, we're guiding to EUR 820 million in Q4. OpEx growth is now coming down meaningfully, and we expect that moderation to continue into 2027. We see that this year's incremental OpEx is driving multiple benefits to our business. Our marketing investments have helped consumer awareness of the value we deliver, supporting future subscriber growth and monetization. On AI, our investments have accelerated feature shipping while keeping headcount flat, setting the business up for further engagement and monetization potential. Our taste model investments are already paying off.

Speaker #3: These rollouts can drive new value for our subscribers and the business, the same way we have seen it over the last three years. Taken together with the first nine months of the year, our Q4 outlook implies a full-year gross margin expansion of approximately 130 basis points compared to 2025.

Speaker #3: Moving to operating income, we're guiding to $820 million in Q4. OPEX growth is now coming down meaningfully. And we expect that moderation to continue into 2027.

Speaker #3: We see that this year's incremental OPEX is driving multiple benefits to our business. Our marketing investments have helped increase consumer awareness of the value we deliver.

Speaker #3: Supporting future subscriber growth and monetization. And on AI, our investments have accelerated feature shipping, while keeping headcount flat. Setting the business up for further engagement and monetization potential.

Speaker #3: Our taste model investments are already paying off. Early deployments show double-digit gains in content discovery and our users are spending more time in select algorithmic sets.

Christian Luiga: Early deployments show double-digit gains in content discovery, and our users are spending more time in select algorithmic sets. As we have said before, we remain focused on striking a clear balance between enhancing LTV and sustainable margin expansion. In conclusion, we are very pleased with how we are tracking into the end of 2026. It is too early to give guidance on 2027. As I have said before, quarterly progression of our margin can be variable due to seasonality and the timing of investments. We remain confident in our path and expect another year of progress towards delivering on our 2030 goals. We are well-positioned to continue compounding growth, profitability, and free cash flow. With that, I hand it back to you, Bryan.

Speaker #3: As we have said before, we remain focused on striking a clear balance between enhancing LTV and sustainable margin expansion. In conclusion, we're very pleased with how we're tracking into the end of 2026.

Speaker #3: It's too early to give guidance on 2027. And as I've said before, quarterly progression of our margin can be variable due to seasonality and the timing of investments.

Speaker #3: We remain confident in our path and expect another year of progress towards delivering on our 2030 goals. We are well positioned to continue compounding growth, profitability, and free cash flow.

Speaker #3: With that, I hand it back to you, Brian.

Bryan Goldberg: All right. Thanks, Christian. Again, if you have any questions, please go to slido.com #SpotifyEarningsQ326. We will be reading the questions in the order in which they appear in the queue with respect to how people vote up their preference for questions. Today's first question is going to come from Sean Diffley, and it is on the free tier. Please discuss early learnings in markets like India and Indonesia, where you are adding some friction to the ad-supported tier, and how we can think about conversion to paid in those markets.

Speaker #1: All right. Thanks, Christian. Again, if you've got any questions, please go to slido.com/spotifyearningsq326. We'll be reading the questions in the order in which they appear in the queue, with respect to how people vote up their preference for questions.

Speaker #1: And today's first question is going to come from Sean Diffley. And it's on the free tier. Please discuss early learnings and markets like India and Indonesia, where you're adding some friction to the ad-supported tier.

Speaker #1: And how we can think about conversion to paid in those markets.

Alex Norström: Thanks for the question, Sean. It has been voting up as the most important question here in the queue, so let us go right at it. Last quarter, I was making a few comments on some changes that we are making to our product and our funnels and in particular in emerging markets, and you are mentioning two of them here. These changes include things like 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 that retains you better and thereby giving you higher LTV, and so on. All these things that we are doing, that you are alluding to and I just spoke to, are business positive. These are good things for our free tier, these are good things for our subscription tier, and thereby also for our revenue. We have a long track record of durable growth.

Speaker #2: Thanks for the question, Sean. I've been rolling it up as the most important question here in the queue, so let's go right at it. Last quarter, I made a few comments on some changes that we're making to our product and our funnels.

Speaker #2: And in particular, in the emerging markets. And you're mentioning two of them here. These changes include things like 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 that retains you better and thereby giving you higher LTV and so on.

Alex Norström: All these things that we are doing, that you are alluding to and I just spoke to, are business positive. These are good things for our free tier, these are good things for our subscription tier, and thereby also for our revenue. We have a long track record of durable growth.

Speaker #2: So all these things that we're doing that you're alluding to, and I just spoke to, are business-positive. These are good things for our free tier.

Speaker #2: These are good things for our subscription tier, and thereby also for our revenue. And we have a long track record of durable growth. I just spoke about that in our early in our initial remarks here.

Alex Norström: I just spoke about that in our initial remarks here. This durability that we have been talking about is really the result of a lot of these types of optimizations, and this is just another example of that. Speaking of India specifically, it is a market where we have 1.4 billion users. We see GDP growth of 7% to 8% several years in a row. What better market is there for us to work on to improve our business growth? I see no other. This is an incredible market and tremendous opportunity for us.

Speaker #2: And this durability that we've been talking about is really the result of a lot of these types of optimizations. And this is just another example of that.

Speaker #2: And speaking of India specifically, it's a market where we have 1.4 billion users. We see GDP growth of 7% to to 8% several years in a row.

Speaker #2: What better market is there for us to work on to improve our business growth on? I see no other. This is an incredible market and tremendous opportunity for us.

Bryan Goldberg: All right. We're going to have another question from Sean Diffley, this time on capital allocation. It appears you've stepped up the pace of share repurchases. Can you discuss how you're approaching capital allocation with free cash flow ramping, and is there room to increase the buyback cadence further?

Speaker #1: All right. We've got to have another question from Sean Diffley, this time on capital allocation. It appears you've stepped up the pace of share repurchases.

Speaker #1: Can you discuss how you're approaching capital allocation with free cash flow ramping? And is there room to increase the buyback cadence further?

Alex Norström: I'll start and then you can jump in, Christian. We mentioned during our Investor Day, now almost half a year ago, that the way we approach this is, we will invest in organic opportunities primarily. As we see good return, we will deploy, and you've seen us do that. With respect to inorganic opportunities, we will do those too. But there's no real change there. You've seen us do that many times before with companies like WhoSampled, who helped us provide a unique dataset to ramp About the Song, which is now used by almost 100 million people. You saw us acquire Findaway, which helped us accelerate Audiobooks. You saw us buy Sonantic, which helped us do AI DJ. So we'll continue to do this as we see opportunity. Then, beyond that, if there is excess cash, we will start engaging in buying back shares.

Speaker #2: I'll start, and then you can jump in, Christian. So we mentioned during our investor day now almost half a year ago that the way we approach this is we will invest in organic opportunities primarily.

Speaker #2: As we see good returns, we will deploy. And you've seen us do that. And with respect to inorganic opportunities, we will pursue those as well.

Speaker #2: But there's no real change there. You've seen us do that many times before with companies like WhoSampled, who helped us provide a unique data set to ramp about the song, which is now used by almost 100 million people.

Speaker #2: You saw us acquire Findaway, which helped us accelerate audiobooks. You saw us buy Sonantic, which helped us do AI DJ. So we'll continue to do this as we see opportunity.

Speaker #2: And then beyond that, if there is excess cash, we will start engaging in buying back shares. And you've seen us do that this year.

Alex Norström: You've seen us do that this year. We've mentioned that we're going to buy back shares to counter the dilutions that are coming from the employee stock programs. You've mentioned that that's about 1 million shares, and we've done that. We're now up to 2.2 million shares in buybacks, totaling about EUR 1 billion or a little more than EUR 1 billion. So we're making progress also there. Christian, is there anything you would like to add?

Speaker #2: We've mentioned that we're going to buy back shares to counter the dilution that's coming from the stock employee stock programs. And you've mentioned that that's about a million shares.

Speaker #2: And we've done that. We're now up to 2.2 million shares in buybacks. Totaling about a billion or a little more than a billion. And so we're making progress also there.

Speaker #2: Christian, is there anything you would like to add?

Christian Luiga: Yeah, I just want to wrap it up by saying that we will maintain a degree of strategic flexibility with a strong balance sheet. So you will see us have a strong balance sheet and a cash balance that makes us be flexible in strategic moves. At the same time, as Alex said, it's obvious with the cash flow we have compounding and on the balance sheet that we will start to return excess cash to shareholders, which we've proven this quarter.

Speaker #3: Yeah. I just want to wrap it up by saying that we will maintain a degree of strategic flexibility with a strong balance sheet. And so you will see us have a strong balance sheet.

Speaker #3: And a cash balance that makes us be flexible in strategic moves. At the same time, as Alex said, we are it's obvious with the cash flow we have, compounding and on the balance sheet, that we will start to return excess cash to the shareholders, which we prove in this quarter.

Bryan Goldberg: All right. Our next question is going to come from Jessica Reif Ehrlich on our ubiquity strategy. As listening shifts to third-party AI agents, as with the new Muse integration, who owns the customer relationship and the data, and how do you keep that from turning Spotify into a back-end supplier?

Speaker #1: All right. Our next question is going to come from Jessica Reef Ehrlich. On our Ubiquiti strategy. As listening shifts to third-party AI agents, as with the new Muse integration, who owns the customer relationship and the data?

Speaker #1: And how do you keep that from turning Spotify into a back-end supplier?

Gustav Söderström: Thank you, Jessica. It is a great question. I get the chance to talk about things I love. So a few things. First of all, it is important to say that listening is actually not shifting. All the listening is happening through Spotify. 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. So the listening is not shifting. That is actually happening and thus increasing through Spotify. How we think about this, though, is, as I said in my prepared remarks, as another example of the ubiquity strategy. So when connected speakers started happening, we tried to figure out how we turn that into a tailwind for Spotify and grow with the connected speaker market.

Speaker #2: Thank you, Jessica. It's a great question. So I get the chance to talk about things I love. So, a few things. First of all, it's important to say that listening is actually not shifting.

Speaker #2: All the listening is happening through Spotify. 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.

Speaker #2: So the listening, it's not shifting. It's actually happening and thus increasing through Spotify. How we think about this, though, is, as I said in my prepared remarks, as another example of the Ubiquiti strategy.

Speaker #2: So, when connected speakers started happening, we tried to figure out how we could turn that into a tailwind for Spotify and grow with the connected speaker market.

Gustav Söderström: As I said, we rebuilt our technology stack, something called the eSDK, the embeddable SDK, making it dead easy for any speaker provider to integrate Spotify. That turned into a great growth vehicle for us. This is why we are ubiquitous today. I think in the same way about this, we rebuilt Spotify as an agent, so that it is dead easy for other agents to integrate us and talk agent to agent. So what this means is that inside an agent like Muse, you can say, "I would like to create a podcast about this and that," that you have been talking to the Muse agent about. This podcast gets published to Spotify, but only visible to you, so that you can listen to it in the morning commute. What happened there is actually that we learn more about you because that podcast is now inside Spotify.

Speaker #2: As I said, we rebuilt our technology stack. Something called the ESDK, the Embeddable SDK, making it dead easy for any speaker provider to integrate Spotify.

Speaker #2: That turned into a great growth vehicle for us. This is why we're ubiquitous today. I think in the same way about this, we rebuilt Spotify as an agent so that it's dead easy for other agents to integrate us and talk agent-to-agent.

Speaker #2: So what this means is that inside an agent like Muse, you can say, "I would like to create a podcast about this and that," referring to the topics you've been discussing with the Muse agent.

Speaker #2: This podcast gets published to Spotify, but only visible to you so that you can listen to it in the morning commute. Now, what happened there is actually that we learned more about you because that podcast is now inside Spotify.

Gustav Söderström: So we know things that we would not have known otherwise about your interests. So this is actually a positive data loop for Spotify rather than the other way around. So this is the reason why we made all of these investments, specifically the Large Taste Model. I have gone on and on about it, but this is the reason we built this, because this is a value of Spotify. Our agent is the best in the world at understanding your taste across all of these mediums. So 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.

Speaker #2: So we know things that we wouldn't have known otherwise about your interest. So this is actually a positive data loop for Spotify, rather than the other way around.

Speaker #2: So this is the reason why we made all of these investments, specifically the large taste model. I've gone on and on about it, but this is the reason we built this—because this is a value of Spotify.

Speaker #2: Our agent is the best in the world at understanding your taste across all of these mediums. So we are not sending the data to these partners.

Speaker #2: They are asking us about something. We do the reasoning over everything we know about you. And then decide what to play for you. So this is also the reason why we built all of this technology.

Gustav Söderström: This is also the reason why we built all of this technology, as I talked about in my prepared remarks, to be able to beat-stretch the music, put it together in the right way. As you know, we are also investing in remixing tools and covers and so forth. Our goal is to be the media service that you use from any agent, really turning the growth of agents into a tailwind rather than a headwind. That is exactly what we are seeing now. We are seeing really good adoption of Spotify inside these agents. While other companies are maybe trying to figure out what to do, and many are leaning out, we are actually leaning in and participating in the growth instead of standing by the roadside and looking at it. We are very excited about this.

Speaker #2: As I talked about in my prepared remarks, to be able to best stretch the music, put it together in the right way, as you know, we're also investing in remixes and covers and so forth.

Speaker #2: So our goal is to be the media service that you use from any agent. Really turning the growth of agents into a tailwind rather than a headwind.

Speaker #2: And that's exactly what we're seeing now. We're seeing really good adoption of Spotify inside these agents. And so, while other companies are maybe trying to figure out what to do—and many are leaning out—we're actually leaning in and participating in the growth instead of standing by the roadside and looking at it.

Speaker #2: So we're very, very excited about this. This is what we said we were going to be the world's first truly intelligent media service. And this is what we've invested in all of this technology.

Gustav Söderström: This is why we said we were going to be the world's first truly intelligent media service, and this is why we have invested in all of this technology.

Bryan Goldberg: Okay, we have got another question from Jessica Reif Ehrlich, this time on the Premium business. In Q3 and Q4, there are many new product rollouts, from Audiobooks globally to reserved fitness and the expanded Spotify Partner Program, Taste Profile in the US, et cetera. What is the 2027 roadmap for monetizing all of these products and features, through new tiers, add-ons or price increases?

Speaker #1: OK. We've got another question from Jessica Reef Ehrlich, this time on the premium business. In the third and fourth quarters, there are many new product rollouts—from audiobooks globally, to reserved fitness, to the expanded Spotify partner program, taste profile in the US, et cetera.

Speaker #1: What is the 2027 roadmap for monetizing all of these products and new features i.e. through new tiers, add-ons, or price increases?

Alex Norström: Jessica, Alex here. I see that we are excited about 2027. I am really excited about 2027 as well, but it is going to be premature for me to talk about specificity around next year. I will give you a bit of how Gustav and I think about the underlying recipe here. Really the work to be done inside Spotify is to add value to our free tier, add value to create a better and better free product. You have seen us do that. About a year ago, we launched the new Spotify Free tier, which is the best free tier out there, and that has kept yielding results over the past 12 to 18 months.

Speaker #2: Jessica, Alex here. I see that we're excited about—

Speaker #3: 2027. I am really excited about 2027 as well. But it's going to be premature for me to talk about specifics around next year. But I'll give you a bit of how Gustav and I think about the underlying recipe here.

Speaker #3: So really, the work to be done inside Spotify is to add value to our free tier, add value to create a better and better free product.

Speaker #3: And you've seen us do that about a year ago. We launched the new Spotify free tier, which is the best free tier out there.

Speaker #3: And that's kept yielding results over the past 12 to 18 months. The other thing we do is, of course, to enrich our premium tier.

Alex Norström: The other thing we do is, of course, to enrich our Premium tier, and to your point, I cannot really remember a time in Spotify's history where we have added so much value back to the Premium tier like this current year here. Then we create products on top of that for the niche audiences and the power law, like we have talked about. Then the third step in this is really just to figure out how to monetize all of this value that we add, whether that be by way of advertising sales or price increases, add-ons, more subscriptions, and better engagement across more days of the month. This is really a simple but very powerful recipe that we have followed and deployed for many years now.

Speaker #3: And I cut to your point. I can't really remember a time in Spotify's history where we've added so much value back to the premium tier like this current year here.

Speaker #3: And then we create products on top of that for the niche audiences and the power law, like we've talked about. And then the third step in this is really just to figure out how to monetize all of this value that we add, whether that be by way of advertising sales, or price increases, add-ons, more subscriptions, and better engagement across more days of the month.

Speaker #3: This is really a simple, but very powerful recipe that we've followed and deployed for many, many years now.

Bryan Goldberg: Okay, our next question is going to come from Eric Sheridan. This time on the ads business. With respect to ads, can you discuss how the Q3 results track relative to your expectations for a H2 2026 growth inflection? Is there any color on the underlying drivers of advertising performance embedded in your overall Q4 revenue commentary?

Speaker #1: OK, our next question is going to come from Eric Sheridan, this time on the ads business. With respect to ads, can you discuss how the third quarter results track relative to your expectations for a second half 2026 growth inflection?

Speaker #1: Is there any color on the underlying drivers of advertising performance embedded in your overall Q4 revenue commentary?

Alex Norström: They are tracking really well against our expectations. We have talked about this before. We have been hard at work for some time now in rebuilding the underlying stack and foundation for advertising sales business at Spotify. I will tell you this, there are a lot of things that have been changing, but there are these three things that have not changed and they remain why advertisers are interested in coming to Spotify. One is that we have a beloved brand. Second of all, we have high-quality content. It is licensed content, and we also have high-quality engagement. It is not just about the hours, it is also about the moments of the day and the context you are in and as many days in a month as possible. We have talked about that before. So these remain the reason for why our special corner of the internet is still very interesting for advertisers to associate themselves with.

Speaker #3: The tracking really well.

Speaker #2: Against our expectations. We've talked about this before. We have been hard at work for some time now in rebuilding the underlying stack and foundation for the advertising sales business at Spotify.

Speaker #2: And I'll tell you this. There's a lot of things that have been changing, but there's this these three things that I've not changed. And they remain why advertisers are interested in coming to Spotify.

Speaker #2: One is that we have a beloved brand. Second of all, we have high-quality content, licensed content. And we also have high-quality engagement. It's not just about the hours.

Speaker #2: It's also about the moments of the day and the context you're in. And as many days in a month as possible. We've talked about that before.

Alex Norström: We have talked about that before. So these remain the reason for why our special corner of the internet is still very interesting for advertisers to associate themselves with.

Speaker #2: So these remain the reason for why our special corner of the internet is still very interesting for advertisers to associate themselves with. Now, what then is our job internally?

Alex Norström: What then is our job internally? Well, it is in light of this, to just make 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. All of these are things that are underway. We have done a lot of work already, but this will just continue to improve and this is what is powering the Q4 guidance.

Speaker #2: Well, it is in light of this—to just make 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's making it easier for folks out there to create audio ads, and so on.

Speaker #2: All of this is our things that is underway. We've done a lot of work already. But this will just continue to improve. And this is what's sort of powering the Q4 guidance.

Bryan Goldberg: Okay. Got another question from Eric Sheridan. Can you discuss how investors should think about the forward trajectory of growth investments, especially across AI and cloud, when measured against the potential for scaling AI-led experiences and products on the user side in the coming quarters?

Speaker #1: OK. We've got another question from Eric. Sheridan. This time on investments. Can you discuss how investors should think about the forward trajectory of growth investments, especially across AI and cloud, when measured against the potential for scaling AI-led experiences and products on the user side in the coming quarters?

Gustav Söderström: Yeah. Thanks, Eric. This is Gustav. I will talk about this from two different lenses. There is obviously productivity within the organization, then there is cost on the consumer experience. First of all, Alex and Christian and I, we said earlier this year that we were going to invest a little bit ahead, because we saw a lot of opportunity. One question that you did not ask, but I am going to answer anyway, is well, what did we get for the investment? First of all, we also said that these investments and these costs were going to start moderating in Q4, which they are. As Alex said in his opening remark, this is a quarter of doing what we said we were going to do. So they are moderating in Q4 and into next year, just as we said. But it is still valid to ask what we got.

Gustav Söderström: Yeah. Thanks, Eric. This is Gustav. I will talk about this from two different lenses. There is obviously productivity within the organization, then there is cost on the consumer experience. First of all, Alex, Christian and I, we said earlier this year that we were going to invest a little bit ahead, because we saw a lot of opportunity. One question that you did not ask, but I am going to answer anyway, is well, what did we get for the investment? First of all, we also said that these investments and these costs were going to start moderating in Q4, which they are. As Alex said in his opening remark, this is a quarter of doing what we said we were going to do. So they are moderating in Q4 and into next year, just as we said. But it is still valid to ask what we got.

Speaker #2: Yeah. Thanks, Eric. This is Gustav. So I'll talk about this from a few different lenses. There is obviously productivity within the organization. Then there is cost on the consumer experience.

Speaker #2: First of all, Alex and Christine and I, we said early this year that we were going to invest a little bit ahead. Because we saw a lot of opportunity.

Speaker #2: So one question that you didn't ask, but I'm going to answer anyway, is like, well, what did we get for the investment? Well, first of all, we also said that these investments and these costs were going to start moderating in Q4, which they are.

Speaker #2: As Alex said in his opening remark, this is a quarter of doing what we said we were going to do. So they're moderating in Q4 and into next year just as we said.

Speaker #2: But it's still valid to ask what we got. Well, we got a lot of investments and platform that excites us. I've spoken at length about the large taste model.

Gustav Söderström: Well, we got a lot of investments in platform that excites us. I have spoken at length about the Large Taste Model, but I also wanted to talk a little bit about the results of the Large Taste Model that we are now seeing already. So we are seeing double-digit growth in discoveries, which is one of the leading metrics for how exciting you think Spotify is. I think it surprises no one, but if you never find any new music, eventually you are going to get less excited about this product. So that is a very important metric to us. I also want to say, it is very early, we are just rolling this out, but it is already on track to add billions of listening hours per year. My experience with these things is, you get a lot of incremental improvement as you start iterating on these things.

Speaker #2: But I also wanted to talk a little bit about the results of the large taste model that we're now seeing already. So we're seeing double-digit growth in discoveries, which is one of the leading metrics for how exciting you think Spotify is.

Speaker #2: I think it surprises no one. But if you never find any new music, eventually you're going to get less excited about this product. So that is a very important metric to us.

Speaker #2: I also want to say I mean, it's very early. We're just rolling this out. But it is already on track to add billions of listening hours per year.

Speaker #2: And my experience with these things is you get a lot of incremental improvement as you start iterating on these things. So I'm very excited about what we're seeing because this was a large investment.

Gustav Söderström: So I am very excited about what we are seeing because this was a large investment. This also goes to the earlier question of the value we are creating in a world of agents, where you interact with Spotify through other agents. This is the value. So we are seeing exactly what we want to see. But more than that, we also invested in a lot of AI features. I talked at length about user control, interactivity, being able to ask for what you actually wanted, and this idea that what LLMs allow you to do is to finally talk to Spotify in English. One question could be, is anyone talking to Spotify? The answer is yes. There are now tens of millions of people speaking to Spotify in English, which I think is remarkable. That does not really happen on any other media service yet.

Speaker #2: This also goes to the earlier question of the value we're creating in a world of agents where you interact with Spotify through other agents.

Speaker #2: This is the value, so we're seeing exactly what we want to see. But more than that, we also invested in a lot of AI features.

Speaker #2: I talked at length about user control interactivity, being able to ask for what you actually wanted and this idea that, well, LLMs allow you to do is to finally talk to Spotify in English.

Speaker #2: So one question could be, is anyone talking to Spotify? The answer is yes. There are now tens of millions of people speaking to Spotify in English.

Speaker #2: Which I think is remarkable. That doesn't really happen on any other media service yet. So we're very excited about the adoption that we're seeing of these features.

Gustav Söderström: We are very excited about the adoption that we are seeing of these features. Another favorite I mentioned in my opening remarks is remixing tools, which is scaling like crazy. We are feeling very good about the return of this investment. I want to reiterate, we said that the costs were going to moderate, and they are moderating now in Q4 and into 2027. I think that covers roughly how you should think about it. I just want to comment also on the productivity side of our engineering. Not only have you seen large cost cuts from the labs in terms of token costs, et cetera, that are obviously very helpful for us, but we have been investing ourselves in these platforms that you heard about, SERP, et cetera, where we can route between agents, including open source models.

Speaker #2: Another favorite I mentioned in my opening remarks is mixing tools, which is scaling like crazy. So we're feeling very good about the return of this investment.

Speaker #2: But I want to reiterate. We said that the costs were going to moderate. And they are moderating. Now in Q4 and into 2027. So I think that covers roughly how you should think about it.

Speaker #2: I just want to comment also on the productivity side of our engineering. Not only have you seen large cost cuts from the labs in terms of token costs, et cetera, that are obviously very helpful for us.

Speaker #2: But we have been investing ourselves in these platforms that you heard about, SERP, et cetera, where we can route between agents, including open source models.

Gustav Söderström: We have done a lot of investment in controlling our own costs. Now we are seeing two things I am very excited about. We have very clear cost controls, where we can route to the models that we want. We are also finally seeing the next level of productivity. I think many companies have said that they see 100% growth in lines of code, PRs, et cetera, and so have we. There is a question like, does that actually translate into end user features? Now as we have gone through, we have 6 months development cycles, we are seeing significant acceleration in end user products that are shipping what we call DoD's, definitions of done, things that are merged and shipped to end users. We are shipping much more. The last part of that question is, does that translate into actual value?

Speaker #2: We've done a lot of investment in controlling our own costs. And now we're seeing two things I'm very excited about. We have very clear cost controls.

Speaker #2: Where we can route to the models that we want. But we're also finally seeing the next level of productivity. I think most many companies have said that they see 100% growth in lines of code, PRs, et cetera.

Speaker #2: And so have we. But there is a question like, does that actually translate into end-user features? And now, as we've gone through we have six months development cycles.

Speaker #2: We are seeing significant acceleration in end-user products. There are shipping, what we call DODs. Definitions of done. Things that are merch and ship to end users.

Speaker #2: So we are shipping much more. And then the last part of that question is, well, does that translate into actual value? And I just told you that it does.

Gustav Söderström: I just told you that it does. We see engagement, retention, active days going up, not just across products like Audiobooks, but also across discoveries, saves, listening hours, et cetera. I feel very good about where we are right now. As Christian Luiga always asks me to say, and always says, we are going to keep being diligent with our costs, as you have seen us be for the several last years. You will also see us take these opportunities when we see them.

Speaker #2: We see engagement, retention, active days going up, not just across products like audiobooks, but also across discoveries, saves, listening hours, et cetera. So I feel very good about what we are right now.

Speaker #2: As Christine always asked me to say, and always says, we are going to keep being diligent. With our costs, as you've seen us be for the several last years.

Speaker #2: But you will also see us take these opportunities when we see them.

Bryan Goldberg: All right. We got another question here, this time from Rich Greenfield on the advertising business. While ads growth recovered as you expected, is there a realistic path where advertising actually lifts Spotify's overall revenue growth rate? Could that be a 2027 event?

Speaker #1: All right. We've got another question here. This time from Rich Greenfield on the advertising business. While ads growth recovered as you expected, is there a realistic path where advertising actually lifts Spotify's overall revenue growth rate?

Speaker #1: Could that be a 2027 event?

Christian Luiga: Thank you, Rich. Christian here. As you say, we are recovering as expected. As we said for a long time, we will move towards double-digit growth in H2 2026. In Q4, we are also continuing to do our progress towards double-digit growth. This is driven by biddable, which is now up to 40%, and also podcasts, as Alex Norström alluded to before. Going into 2027 and going into path journey in the future where we are in double-digit growth, of course that is important. Even if ad support is only 10% of the revenue today, it is much better to have 10% revenue growth or above than having a low single-digit growth. That will, of course, drive the revenue growth from the total.

Speaker #3: Thank you, Rich. Christine here. As you said, we are recovering as expected, just as we have stated for a long time. We will move towards double-digit growth in the second half of 2026.

Speaker #3: And in quarter four, we are also continuing to do our progress towards double-digit growth. This is driven by Bidable, which is now up to 40%, and also Podcast, as Alex alluded to before.

Speaker #3: So going into 2027 and going into a path in a journey in the future where we are in double-digit growth, of course, that is important.

Speaker #3: 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.

Speaker #3: So that will, of course, drive the revenue growth from the total.

Bryan Goldberg: Okay, we have got another question from Sean Diffley. This one on our in-house tech. You recently started selling your own internal software tools to other companies as you are becoming an R&D operating system. Can you please discuss the rationale here and how big of an opportunity this can be?

Speaker #1: OK. We've got another question from Sean Diffley. This one on our in-house tech. You recently started selling your own internal software tools to other companies.

Speaker #1: As you are becoming an R&D operating system, can you please discuss the rationale here and how big of an opportunity this can be?

Gustav Söderström: Yeah. The way to think about this right now is mostly as option value. The reason we are doing this is because, as we just talked about, we invested quite a bit to be able to be at the very forefront of agentic development. What happened is, not surprisingly, a lot of other companies asked us about that and said we would also like to use this technology. Because we have taken these costs anyway, we could choose to just amortize them over our few thousand developers, or we could choose to amortize them over more developers. That is how we are thinking about it. We are taking these costs anyway to stay at the forefront. This is a way for us to amortize those costs more efficiently. That is how we are thinking about it right now.

Speaker #2: Yeah, so I think the way to think about this right now is mostly as option value. The reason we're doing this is because, as we just talked about, we invested quite a bit to be able to be at the very forefront of agentic development.

Speaker #2: And so then what happened is, not surprisingly, a lot of other companies asked us about that and said, we would also like to use this technology.

Speaker #2: And because we've taken these costs anyway, we could choose to just amortize them over our few thousand developers, or we could choose to amortize them over more developers.

Speaker #2: So that's how we're thinking about it. We're taking these costs anyway to stay at the forefront, and this is a way for us to amortize those costs more efficiently.

Speaker #2: That's how we're thinking about it right now. I'm not going to give any more guidance on this at the moment. Think of it as option value for the time being.

Gustav Söderström: I am not going to give any more guidance on this right now. Think about it as option value for the time being.

Bryan Goldberg: Okay. Our next question is going to come from Jason Bazinet on the Family Plan. It was recently reported that you are beginning to crack down on Family Plan subscribers that do not live in the same home. What markets are you pursuing this enforcement? How long before the implementation is complete, and what financial impact do you expect from this?

Speaker #1: OK. Our next question is going to come from Jason Bazinay on the family plan. He was recently reported that you're beginning to crack down on family plan subscribers that don't live in the same home.

Speaker #1: What markets are you pursuing this enforcement? How long before the implementation is complete? And what financial impact do you expect from this?

Christian Luiga: Jason, this is not as much a crackdown as it is actually a routine improvement of our verification methods for our Family Plan. Family Plan has existed for a long while. It has been around for, I think it is now close to 12, 13 years, in Spotify history, and it makes up a pretty significant proportion of our subscriber base. As such, it is important for us to just make sure over time that we improve the verification methods that we have, because there are certainly ways, over time, to find holes around it, and as that happens, we figure out how to improve it over time. This is not something that has an end date. It is not an implementation that is going to complete. This is just ongoing routine.

Speaker #3: Jason, this is not as much a crackdown as it is actually a routine improvement of our verification methods for our family plan. Family plan has existed for a long while.

Speaker #3: It's been around for, I think it's now close to 12, 13 years, in Spotify history. And it makes up a pretty significant proportion of our subscriber base.

Speaker #3: And as such, it's important for us to just make sure over time that we improve the verification methods that we have. Because there are certainly ways to, over time, to find holes around it.

Speaker #3: So and as that happens, we figure out how to improve it over time. This is not something that has an end date. This is not an implementation that's going to complete.

Speaker #3: This is just ongoing routine.

Bryan Goldberg: Okay, our next question is going to come from Justin Patterson on AI investment. Now that you have had nearly 1 year of deploying new tools like Claude Code, could you talk about your view on AI ROI and how that has evolved and shaped your thought on investment levels?

Speaker #1: OK. Our next question is going to come from Justin Patterson on AI investment. Now that you've had nearly one year of deploying new tools like Claude Code, could you talk about your view on AI ROI and how that's evolved and shaped your thought on investment levels?

Gustav Söderström: Thanks, Justin, this is Gustav. I think I already mentioned this. We saw the typical early productivity metrics of lines of code, PRs, et cetera, that I think everyone is seeing. But I do not think everyone is yet seeing the two harder productivity metrics. We are, as we have now had about two cycles and with cycles, I mean 6-month development cycles, because we roughly plan in 6-month increments, and then we measure. We decide what we are going to do for 6 months, then we build it, and then we can measure how much of that we delivered. We are seeing very significant acceleration in the last 6-month cycle in actually building and shipping end-user features. So I feel very good about that AI ROI. Obviously, as I said, the next step is to figure out, sure, it is great shipping features, but is anyone using them?

Speaker #2: Thanks, Justin. This is Gustavo. I think I already mentioned this. We saw the typical early productivity metrics—lines of code, pull requests, et cetera—that I think everyone is seeing.

Speaker #2: But I don't think everyone has yet seen the two harder productivity metrics. And we are, as we've now had about two cycles. And with cycles, I mean six-month development cycles, because we roughly plan in six-month increments.

Speaker #2: And then we measure. We decide what we're going to do for six months. Then we build it. And then we can measure how much of that we delivered.

Speaker #2: And we are seeing very significant acceleration in the last six-month cycle in actually building and shipping end-user features. So I feel very good about that AI ROI.

Speaker #2: And obviously, as I said, the next step is to figure out, sure, it's great shipping features. But is anyone using them? Are they producing engagement, retention?

Gustav Söderström: Are they producing engagement, retention, and revenue? As I said before, it is actually all of the above. We have adoptions, producing engagement, increases retention, but it is also, in the case of Audiobooks, driving direct ARPU. We feel very good about what we are seeing right now, which is why you should expect us to remain at these investment levels. As I said before, hopefully by now it is becoming clear that we are pretty diligent about these opportunities. We try to understand what the business case is. You are going to see us roughly at the same levels. We are going to take these opportunities when we see them, and we are going to communicate them the way we have.

Speaker #2: And revenue? And as I said before, it's actually all of the above. It's producing—we have adoptions, producing engagement, increases retention—but it is also, in the case of audiobooks, driving direct ARPU.

Speaker #2: So we feel very good about what we're seeing right now, which is what we should expect us to sort of remain at these investment levels.

Speaker #2: But as I said before, hopefully by now it's becoming clear that we're pretty diligent about these opportunities. We try to understand what the business case is.

Speaker #2: So you're going to see us roughly at the same levels. We're going to take this opportunity when we see them. And we're going to communicate them the way we have.

Bryan Goldberg: Okay, we have got another question from Jason Bazinet, this time on capital allocation. You have got no debt, nearly EUR 10 billion of cash and cash equivalents. How do you expect to use this cash to create shareholder value?

Speaker #1: OK. We've got another question from Jason Bazinay, this time on capital allocation. You've got no debt, nearly $10 billion of cash and cash equivalents.

Speaker #1: How do you expect to use this cash to create shareholder value?

Christian Luiga: Jason, Christian here. Thanks for the question again. I will just go back a little bit to what we said before. Having a strong balance sheet gives us strategic optionality and flexibility to create shareholder return. We have said that we will do that by investing in our organic journey, but also inorganic journey. On top of that, as we have been very clear, we think that with this high number of cash pile that we have, on top of the cash flow compounding over time, that we will start to return cash to shareholders of the excess cash. That is what we have started doing in Q1. There is no news on that, and I think it is quite clear message, and we work very opportunistically in how we invest.

Speaker #3: So Jason Christian here, thanks for the question again. I will just go back a little bit to what we said before. I mean, having a strong balance sheet gives us strategic optionality and flexibility to create shareholder return.

Speaker #3: And we have said that we will do that by investing in our organic journey, but also in organic journey. And on top of that, as we've been very clear, we think that with this high number of cash pile that we have, on top of the cash flow compounding over time, that we will start to return cash to shareholders of the excess cash.

Speaker #3: And that's what we have started doing in Q1. So there's no news on that, and I think it's a quite clear message. We work very opportunistically in how we invest.

Bryan Goldberg: Okay, our next question is going to come from Justin Patterson, this time on Studio. While agents and assistants do not seem disruptive to your business, it does seem like something that could encroach upon emerging products like Studio by Spotify, which builds custom podcasts and has assistant-like capabilities. How do you believe the opportunity for this product has changed?

Speaker #1: OK. Our next question is going to come from Justin Patterson. This time on Studio. While Agents and Assistants do not seem disruptive to your business, it does seem like something that could encroach upon emerging products like Studio by Spotify.

Speaker #1: Which builds custom podcasts and has assistant-like capabilities. How do you believe the opportunity for this product has changed?

Gustav Söderström: Yeah. I think the way to think about Studio is back to anticipation. We anticipated that these kind of agents were going to happen. So we built the ability to use Spotify agentically in our desktop client for the hardcore frontier users. We learn a lot. This is why we have these features, like creating podcasts. Then we also built skills for them so that third-party agents could also create them. As I explained before, 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. So we think this is definitely a tailwind for us. You will still be able to create these things inside Spotify as well.

Speaker #2: Yes. I think the way to think about Studio is back to anticipation. We anticipated that these kind of agents were going to happen. So we built the ability to use Spotify agentically in our desktop clients for the sort of hardcore frontier users.

Speaker #2: And we learned a lot. This is why we have these features. Like creating podcasts. Then we also built skills for them, so that third-party agents could also create them.

Speaker #2: And as I explained before, it is very valuable when someone creates Spotify content through these third-party agents using their personal context about their life.

Speaker #2: That just makes Spotify more valuable. So we think this is definitely a tailwind for us. But you will still be able to create these things inside Spotify as well.

Gustav Söderström: I think, again, the best analogy is our ubiquity strategy that has been very successful for us in the age of connected speakers and devices, where we built this layer where you can use Spotify from any third-party interface, but using Connect, we can still control and understand the playback. That is the way to think about this as well. It is Connect for the agentic age. I think the opportunity is very large for us. I think personalized content is clearly happening, and that is why we invested towards it early.

Speaker #2: I think, again, the best analogy is our Ubiquiti strategy, that has been very successful for us in the age of connected speakers and devices.

Speaker #2: We built this layer where you can use Spotify from any third-party interface, but using Connect, we can still control and understand the playback.

Speaker #2: That is the way to think about this as well. It is sort of Connect for the agentic age. I think the opportunity is very large for us.

Speaker #2: I think personalized content is clearly happening, and that's why we invested toward it early.

Bryan Goldberg: Okay, we have got a question now from Doug Anmuth on our Audiobooks expansion. How should we think about the margin impact of expanding Audiobooks from 22 markets to more than 180 by year-end? Can you see similar positive benefits as you did in the early launches?

Speaker #1: OK, we've got a question now from Doug Ameth on our audiobooks expansion. How should we think about the margin impact of expanding audiobooks from 22 markets to more than 180 by year-end?

Speaker #1: Can you see similar positive benefits as you did in the early launches?

Alex Norström: We certainly see similar positive benefits, which is why we have decided to go broad and basically have the first global Audiobooks business. I want to take you back also a little bit to how this started. One very powerful way to detect really what the desirability is of the different types of content is to just follow your users lead. This is now almost three years ago when Gustav Söderström and I saw the uptake of Audiobooks in Germany popping just as a, really as an accident. Someone uploaded some Audiobooks onto our service and really saw that users were captured by this type of content. So we started this little project between Gustav Söderström and I and a small crack team. We worked at it. We saw that there was tremendous opportunity and that we could make a difference.

Speaker #2: We certainly see similar positive benefits,

Speaker #3: which is why we've decided to go broad and basically have the first global audiobooks business. And I want to take you back also a little bit to how this started.

Speaker #3: One very powerful way to detect what the desirability is of different types of content is to just follow your users' lead. And this is now almost three years ago, when Gustavo and I saw the uptake of audiobooks in Germany pop up, really as an accident.

Speaker #3: Someone uploaded some audiobooks onto our service. And really saw that users were captured. But by this type of content. And so we started this little project between Gustavo and I and a small crack team.

Speaker #3: We worked at it. We saw that there was tremendous opportunity and that we could make a difference. We could certainly be helpful in bringing more book listeners to the world.

Alex Norström: We could certainly be helpful in bringing more book listeners to the world. We decided to set a sail, and now we are 3 years later, and we have had a good 3 years of real positive benefits. We have increased our Audiobooks listenership by 40%. This is even before launching to the rest of the world. We have seen listening hours grow as well. The way you think about the impact is really that we have increased the number of days that people are active on Spotify, which ultimately drives retention and also lifetime value. We have also seen early but very strong indications on add-ons for this type of category really working out. That taken together, this is great for our users, and this is great for Spotify, and we are super excited about the launch that we are doing right now.

Speaker #3: So we decided to set a sale. And now we're three years later. And we've had a good three years of real positive benefits with increased our audiobooks listenership by 40%.

Speaker #3: This is even before launching to the rest of the world. And we've seen listening hours grow as well. And the impact that the way you think about the impact is really that we've increased the number of days that people are active on Spotify, which ultimately drives retention and also lifetime value.

Speaker #3: We've also seen early but very strong indications on add-ons for this type of category really working out. So that taken together, this is great for our users.

Speaker #3: And this is great for Spotify. And we are super excited about the launch that we're doing right now. And as far as margin goes, the way to think about that is we've set targets at Investor Day.

Alex Norström: As far as margin goes, the way to think about that is we have set targets at Investor Day, and we are marching towards those targets.

Speaker #3: And we're marching towards those targets.

Bryan Goldberg: Okay, we have got a question from Rich Greenfield on AI agents. As agents like Muse and Instinct take over the interface, they could compare subscription prices, switch services seamlessly, or cancel ones that go unused. If the agent owns the relationship, what keeps Spotify from becoming an interchangeable back-end pipe? Is churn from agents a real risk?

Speaker #1: OK. We've got a question from Rich Greenfield on AI agents. As agents like Muse and Instinct take over the interface, they could compare subscription prices, switch services, seamlessly.

Speaker #1: Or cancel ones that go unused. If the agent owns the relationship, what keeps Spotify from becoming an interchangeable back-end pipe is churn from agents a real risk?

Gustav Söderström: Thanks, Rich. An excellent question. I am going to answer in 2 parts. First, I want to again push back a little bit on the as agents like Muse and Instinct take over the interface. The way to think about it is, Spotify has been integrated into, for example, Google Maps and Waze for decades. We have not talked about it because I did not want competition to understand, but it has been fantastic for us. 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. That was not negative for us. We did not get commoditized. We actually grew tremendously. That is the way to think about this as well. Spotify being integrated is a growth factor for us.

Speaker #2: Thanks, Rich. And excellent question. I'm going to answer in two parts. First, I want to again push back a little bit on the as agents like Muse and Instinct take over the interface.

Speaker #2: The way to think about it is, Spotify has been integrated into, for example, Google Maps and Waze for decades. We haven't talked about it because I didn't want competition to understand.

Speaker #2: But it's been fantastic for us. So people have been using Spotify. Through Google Maps and Waze, during their commute for years. That has been tremendous growth for us.

Speaker #2: Because Spotify and its business model works in the background. So that was not negative for us. We didn't get commoditized. We actually grew tremendously.

Speaker #2: So that is the way to think about this as well. Spotify being integrated is a growth factor for us. As long as we feel comfortable about our differentiation in terms of data and experience, which I've talked at length about, which we feel very comfortable about, so yes, these things are an interface in front of us.

Gustav Söderström: As long as we feel comfortable about our differentiation in terms of data and experience, which I have talked at length about, which we feel very comfortable about. Yes, these things are an interface in front of us, but that has been true for some time, and we think it is a good thing. It is driving growth for us. On the second part of the question, which I think is excellent. The first thing that Muse as an agent asks you as a user is often, "Hey," it wants me to go through your email and try to help you find subscription that you are not using. The important part of that is the last sentence, "that you are not using." The good thing for Spotify is we will never bet on you forgetting about your subscription. We will never bet on breakage or trying to trick you.

Speaker #2: But that's been true for some time. And we think it's a good thing. It's a driving growth for us. Now, on the second part of the question, which I think is excellent, the first thing that Muse as an agent asks you as a user is often like, hey, want me to go through your email and try to help you find subscription?

Speaker #2: That's that you're not using. And the important part of that is the last sentence, that you're not using. So the good thing for Spotify is we were never a bet on you forgetting about your subscription.

Speaker #2: We were never a bet on breakage. Or trying to trick you. In fact, I think Alex has talked about this. We have over 100 million users that use Spotify.

Gustav Söderström: In fact, I think Alex Norström has talked about this. We have over 100 million users that use Spotify 28 days of the month. We are one of the most highly engaging services in the world. So when we ask our users, we are not interested in breakage either. When we ask our users how many of them subscribe to Spotify without realizing it is basically no one. So we think we are one of the best-positioned services in the world for this age. I actually think this will be helpful for us. It is a bold bet, but I think on that list of things that you unsubscribed from, Spotify is going to be the last thing that you unsubscribe from. We know this from previously. We have been around for 20 years. We have gone through financial crisis, et cetera. We are one of the most resilient subscriptions that exist.

Speaker #2: So the 28 days of the month, we're one of the most highly engaged engaging services in the world. So when we ask our users, we're not interested in breakage either.

Speaker #2: When we ask our users, how many of them subscribe to Spotify without realizing it, it's basically no one. So we think we are one of the best positioned services in the world for this age.

Speaker #2: I actually think this will be helpful for us. It's a bold bet. What I think on that list of things that you unsubscribe from, Spotify is going to be the last thing that you unsubscribe from.

Gustav Söderström: We know this from previously. We have been around for 20 years. We have gone through financial crisis, et cetera. We are one of the most resilient subscriptions that exist.

Speaker #2: We know this from previously. We've been around for 20 years. We've gone through financial crisis, et cetera. We're one of the most resilient subscriptions that exist.

Gustav Söderström: It is because we never bet on you forgetting about your subscription. I think the other thing, the opposite could also be true. I think these agents are going to help you subscribe to the best music service, to the best podcast service, and help you understand that Spotify is actually a better deal.

Speaker #2: And it is because we never bet on you forgetting about your subscription. I think the other thing, the opposite could also be true. I think these agents are going to help you subscribe to the best music service, to the best podcast service, and help you understand that Spotify is actually a better deal.

Bryan Goldberg: All right. We have got time for about 2 more questions. The next one is going to come from Batya Levi on new product. How has demand been for the new features you have launched this year, Taste Profile, Prompted Playlist, et cetera? As the product delivers more value, how do you balance raising prices against growing the subscriber base?

Speaker #1: All right. We've got time for about two more questions. The next one is going to come from Basha Levi. On new product. How is demand been for the new features you've launched this year?

Speaker #1: Taste profile, prompted playlist, et cetera. And as the product delivers more value, how do you balance raising prices against growing the subscriber base?

Alex Norström: Thanks for the question, Batya. We have used the concept of value to price ratio and also the value stick many times. I will remind you of this one because this is really how we think about launching product, adding value, and then how to price it. It really comes down to us figuring out how the subscriber is going to win, meaning to get an improved value to price ratio over time. In the first 15 years of Spotify, we had a lot of investment in just value, better product, better content experiences, just better everything all the time, every year. As we sort of grew and got scale, then we started engaging in price increases, which helped us monetize and reinvest that monetization back into the product for more value. That is the journey we are on.

Speaker #3: Thanks for the question, Basha. So, we've used the concept of value-to-price ratio and also the value stick many times. I'll remind you of this one because this is really how we think about launching products, adding value, and then how to price it.

Speaker #3: It really comes down to us figuring out how the subscriber is going to win, meaning to get an improved value to price ratio over time.

Speaker #3: Now, in the first 15 years of Spotify, we had a lot of investment in just value, better product, better content experiences, just better everything all the time, every year.

Speaker #3: And as we sort of grew and got scale, then we started engaging in price increases, which helped us monetize and reinvest that monetization back into the product for more value.

Speaker #3: So that's a journey we're on. As you can see, us launching more products and adding more content verticals onto the platform is simply us wanting to add more value to subscribers and users, so that they can win when it comes to value-to-price ratio over time.

Alex Norström: As you can see us launching more product, adding more content verticals onto the platform, it is just simply us wanting to add more value to subscribers and users so that they can win when it comes to value to price ratio over time. That is really how we balance raising price against a growing subscriber base.

Speaker #3: And so that's really how we balance raising price against growing subscriber base.

Gustav Söderström: Just to fill in there, I think I covered already the demand. We are very excited about the demand that we see for these AI-based features. We talked about SongDNA, but also features like About the Song is also on its way to 100 million users with tens of millions of people talking to Spotify, several tens of millions of people listening to these authentic sets. We feel quite good about the demand for them.

Speaker #2: And just to fill in there, I think I covered already the demand. We're very excited about the demand that we see for these AI-based features.

Speaker #2: We talked about Song DNA, but also features like About the Song is also on its way to 100 million users. We have tens of millions of people talking to Spotify.

Speaker #2: Several tens of millions of people listening to these agentic sets. So we feel quite good about the demand for them.

Bryan Goldberg: All right. Our last question today is going to come from Michael Morris on music industry partnerships. The Universal Music Group and Warner Music Group agreements reached their 2-year mark in Q1 2027. How do your 2027 pricing plans and the add-on tiers factor into renewal talks on core streaming terms? Do you expect the renewed agreements to be structured like your current deals?

Speaker #1: All right. And our last question today is going to come from Michael Morris on music industry partnerships. The Universal Music Group and Warner Music Group agreements reached their two-year mark in the first quarter of 2027.

Speaker #1: How do your 2027 pricing plans and the add-on tiers factor into renewal talks on core streaming terms? And do you expect the renewed agreements to be structured like your current deals?

Alex Norström: Of course, we don't speak to the specific of agreements with our partners. But I can say this is a reoccurring two-year rhythm that we've more or less had forever in Spotify's lifetime. And to your point, now we're coming up on another one. We're excited. We're working with our partners and relationship is just improving. It's improving primarily because our interests are aligned. When our interests are aligned and growing even more aligned, then that makes it easier for us to create win-win situations.

Speaker #3: Now, of course, we don't speak to the specific of agreements with our partners. But I can say this. This is a reoccurring two-year rhythm that we've more or less had forever.

Speaker #3: In Spotify's lifetime and to your point, now we're coming up on another one. And we're excited. We're working with our partners. And relationship is just improving and it's improving primarily because our interests are aligned.

Speaker #3: So when our interests are aligned, and growing even more aligned, then that makes it easier for us to create win-win situations.

Bryan Goldberg: All right, great. We've reached the end of today's Q&A session. I want to turn the call back over to Alex for some concluding remarks.

Speaker #1: All right. Great. So we've reached the end of today's Q&A session. And I want to turn the call back over to Alex for some concluding remarks.

Alex Norström: Thank you, Bryan. To close us out, we are building a durable business at scale with a tremendous amount of opportunity ahead. As I said at the top of the call, this quarter, we did what we said we would. That's how we'll keep running the business. Thank you all for joining us.

Speaker #2: Thank you, Brian. To close out, we are building a durable business at scale with a tremendous amount of opportunity ahead. And as I said at the top of the call, this quarter we did what we said we would.

Speaker #2: And that's how we'll keep running the business. Thank you all for joining us.

Bryan Goldberg: All right. Thank you everyone for joining and for your interest in Spotify. A replay of today's call will be available on our website and also on the Spotify app under Spotify earnings call replays. We look forward to speaking with you all soon.

Speaker #1: All right. Thank you, everyone, for joining and for your interest in Spotify. A replay of today's call will be available on our website and also on the Spotify app under Spotify Earnings Call Replays.

Speaker #1: We look forward to speaking with you all soon.

Operator: This concludes today's conference call. You may now disconnect.