Spotify reported a record number of monthly active users in the fourth quarter, highlighting the continued impact of its annual “Wrapped” campaign and new features introduced on its free tier.
The Swedish music streaming company said it added 38 million users during the quarter, bringing its total monthly active user base to 751 million, an 11% increase compared with the same period last year. Paying subscribers also grew, rising 10% year-on-year to 290 million.
Wrapped Campaign Drives Engagement and Social Sharing
Spotify attributed much of the user growth to its year-end “Wrapped” campaign, which provides users with personalised summaries of their listening habits.
According to the company, the campaign engaged more than 300 million users globally and generated 630 million shares across social media platforms in 56 languages. The initiative has become a key retention and acquisition tool, reinforcing Spotify’s position as a socially driven music platform.
Revenue Growth Supported by Subscriptions
Spotify reported quarterly revenue of €4.53 billion ($5.39 billion), representing a 7% increase from a year earlier. Subscription revenue rose 8%, reflecting continued growth in paid memberships.
However, the company’s ad-supported segment faced headwinds, with advertising revenue declining 4% to €518 million ($616.6 million). Despite this, Spotify said it benefited from improved ad sales in podcasts and music, contributing to stronger overall margins.
Gross margin increased by 83 basis points to a record 33.1%, a metric closely watched by investors as an indicator of progress toward sustained profitability.
Leadership Transition and Business Expansion
The results come as Spotify enters a new leadership phase. Co-CEOs Gustav Söderström and Alex Norström have taken over management responsibilities from co-founder Daniel Ek, inheriting a company that has significantly expanded beyond its original music streaming focus.
Originally launched as a pure-play music service, Spotify now offers podcasts, audiobooks, music videos, and video podcasts. The platform has also introduced features that allow users to book concert tickets and explore background stories behind songs.
Focus on Retention and AI-Driven Features
Spotify has continued to invest in user retention through social and interactive features. Recent additions include group chats, expanded sharing tools, and improved content discovery options.
The company has also accelerated its use of artificial intelligence, rolling out tools such as an AI DJ, AI-generated playlists, and new controls that allow users to exclude specific tracks from recommendations. These features aim to give listeners greater control over their experience while increasing time spent on the platform.
Outlook
Spotify’s latest results underline the effectiveness of its engagement-led growth strategy, particularly its ability to blend personalised content, social sharing, and AI-driven discovery. While advertising revenue remains under pressure, strong subscription growth and expanding margins suggest the company is continuing to strengthen its long-term business model.
