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Further Reading from MarketBeat.com Spotify Posts Huge EPS Beat: Shares Are Still Down Big From HighsWritten by Leo Miller. Published 11/5/2025. 
Key Points - Spotify is getting ready to introduce not one, but two new CEOs to replace the firm's pioneering founder.
- See why Spotify's massive EPS beat didn't lead shares to move higher.
- SPOT remains down nearly 20% from highs, and its ad-supported customer base provides a significant growth opportunity.
Spotify Technology (NYSE: SPOT) has long dominated music streaming, cementing its status as a top growth stock in digital entertainment. After plunging 66% in 2022, shares have risen nearly 700% through the Nov. 4 close. 7 High Yield Dividend Stocks to Buy Now 💰
Love steady payouts? This free report reveals 7 high-yield dividend stocks you need to know about. From Company #3, a tobacco giant innovating with smokeless products, to Company #4, famously known as "The Monthly Dividend Company," these picks deliver steady income you can count on. Perfect for income-focused investors. Still about 19% below its June all-time high, recent developments—including a CEO transition and an earnings beat—could reshape the company's trajectory. The firm recently announced that its long-term Chief Executive Officer (CEO), Daniel Ek, is stepping down. Below we examine that leadership change and the latest earnings results, and what they mean for investors going forward. Spotify's Leadership Shakeup: From Visionary Founder to Collaborative Approach On Jan. 1, 2026, Gustav Söderström and Alex Norström will become co-CEOs of Spotify, replacing Daniel Ek, who founded the company and led it since 2006. Ek helped reshape the music industry. Apple (NASDAQ: AAPL) did not launch Apple Music until 2015, by which point Spotify already had more than 70 million users. That early lead underscored Ek's role as a pioneer in streaming. Fortunately, Ek's departure is not performance-related; he will remain on the board as executive chairman, which should limit disruption. Both Söderström and Norström have been with Spotify for over 15 years, giving them deep institutional knowledge. Investors reacted cautiously: shares fell about 4.2% on the day the company announced the leadership change. The transition is worth monitoring, but it should not automatically alarm long-term investors. Spotify Posts Huge EPS Beat, But Profitability Caveats and Guidance Weigh on Shares Spotify reported solid Q3 2025 results. Revenue was €4.53 billion (approx. $5.02 billion), up 7% and modestly above estimates of €4.23 billion (approx. $4.86 billion). Diluted EPS came in at €3.34 (approx. $3.83), well above expectations of €1.96 (approx. $2.25), representing an upside of about €1.38 (approx. $1.58). The outperformance reflected expansion in both gross and operating margins: gross margin rose 53 basis points to 31.6%—roughly 50 basis points ahead of company guidance—while operating margin improved 220 basis points to 13.6%. There are important caveats, however. Management said much of the gross-margin improvement stemmed from an adjustment to estimates for "rights holder liabilities," a one-time accounting change rather than an ongoing business improvement. Roughly 40% of the operating-margin gain came from lower-than-expected "social charges"—employment-related taxes tied in part to stock-based compensation valuations—which were reduced as the company's share price declined during the quarter. In short, the EPS beat was meaningful but partly driven by accounting and tax timing effects rather than solely by core revenue or recurring cost improvements. Despite adding 3 million users, Spotify's Q4 revenue guidance of €4.5 billion (approx. $5.17 billion) came in lighter than many expected. The mixed message—strong EPS but conservative guidance and one-time drivers—pushed shares down about 3.4% after the release. SPOT's Ad-Supported Opportunity Remains Compelling Spotify's ad-supported tier remains under-leveraged. Although about 63% of its total user base is on the free, ad-supported tier, that cohort generated only roughly 10% of total revenue in Q3. Monetizing ad-supported users more effectively would be a meaningful revenue lever for the company. Management is revamping Spotify's ad-supported monetization strategy and expects this segment to reach healthier growth rates in the second half of 2026. With shares well off their highs and clear opportunities ahead—particularly around advertising—Spotify's outlook remains constructive, although execution on monetization and leadership transition will be key to investor confidence.
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