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Spotify forecasts fourth-quarter profit above estimates on AI bets - Finance news and analysis from Global Banking & Finance Review
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Spotify forecasts fourth-quarter profit above estimates on AI bets

Published by Global Banking & Finance Review

Posted on October 22, 2026

2 min read

· Last updated: October 22, 2026

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Spotify Projects Higher-Than-Expected Q4 Profit Boosted by AI Bet

Spotify's Q4 Profit Forecast and AI Strategy

Q4 Profit Outlook Surpasses Expectations

Oct 22 (Reuters) - Spotify forecast fourth-quarter profit above Wall Street estimates on Thursday, as the Swedish music streaming company bets on its AI-powered features to drive user growth in the crucial holiday season.

The company expects operating income of €820 million ($920.53 million), compared with analysts' average estimate of €813.4 million, according to data compiled by LSEG.

Shares of the company were last up more than 3% in volatile premarket trading.

AI-Powered Features Drive User Engagement

Spotify offers AI-powered features such as its AI DJ, which curates personalized music mixes with spoken commentary, and prompt-based playlists that let users describe a mood or listening preference to generate tailored selections.

Competitive Landscape and AI Investment

Investors closely monitor the company's profitability as it invests in AI to improve discovery and engagement on the platform to attract more users and fend off emerging music-generation rivals such as Suno and Udio.

Recent Financial Performance

In the third quarter, the company reported operating income of €672 million, in line with Visible Alpha-compiled analysts' average estimate of €671.8 million.

Spotify reported revenue of €4.97 billion in the quarter, compared with estimates of €4.98 billion, according to LSEG data.

Executive Commentary and Growth Outlook

"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 is more runway ahead," co-CEO Alex Norstrom said in a statement.

User Growth and Subscriber Forecasts

Spotify's monthly active users forecast of 818 million for the fourth quarter was marginally below Visible Alpha estimates of 819 million, while its outlook for a 10 million increase in premium subscribers to 316 million was above estimates of 314.7 million.

Additional Information

($1 = 0.8908 euros)

(Reporting by Jaspreet Singh in Bengaluru; Editing by Sriraj Kalluvila)

Key Takeaways

  • Spotify forecasts Q4 operating income of €820M, beating analyst consensus of €813.4M (LSEG).(in.investing.com)
  • AI-driven features such as AI DJ and prompt-based playlists are central to Spotify’s strategy to boost engagement and fend off AI-native music competitors.(newsroom.spotify.com)
  • The company’s Q3 operating income came in at €672M, aligning with expectations, while revenue of €4.97B slightly missed estimates of €4.98B. Spotify forecasts 818M MAUs and 316M premium subscribers for Q4, slightly above expectations on subscribers.(in.investing.com)

Frequently Asked Questions

How are Spotify's AI features impacting its growth?
Spotify's AI-powered features, like AI DJ and prompt-based playlists, are designed to enhance user experience and drive user growth.
How did Spotify's third-quarter financial results compare to estimates?
Spotify reported a Q3 operating income of €672 million, matching analyst estimates, and revenue of €4.97 billion, slightly below the €4.98 billion estimate.

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