Spotify Reports 15% Operating Margin, 11% User Growth and €834M FCF
Spotify expanded its operating margin to 15%, up over 300 basis points year-over-year, while R&D and SG&A expenses declined as a percentage of revenue. Total monthly active users reached 751 million, up 11% year-over-year, premium subscribers grew 10% on price hikes, and free cash flow was €834 million.
1. Operating Margin Expansion and Cost Control
Spotify expanded its operating margin to 15%, a more than 300 basis-point increase year-over-year, driven by gross margin improvements and reductions in R&D and SG&A as a percentage of revenue.
2. User Growth and Pricing Power
Total monthly active users climbed to 751 million, up 11% year-over-year, while premium subscribers rose 10% as price increases were absorbed with limited churn, and ARPU improved sequentially.
3. Cash Flow and Advertising Challenges
Free cash flow reached €834 million, enabling share repurchases and balance sheet strengthening, even as ad-supported revenue fell 3.5% on a monetization gap that Spotify expects to reverse through optimization resets.