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Today's Bonus Content 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 leading growth stock in digital entertainment. After plunging 66% in 2022, shares have climbed nearly 700% through the Nov. 4 close. Here's what income-focused investors are discovering fast:
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Our newest research reveals three of the strongest cash machines in today's income landscape [Download Your Free Report Before It Goes Public] While still about 19% below its all-time high from June, recent developments—including a CEO transition and an earnings beat—could reshape the company's trajectory. The firm recently announced that its founder and long-time CEO, Daniel Ek, is stepping down. Below we analyze that development and the latest earnings results at Spotify, 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 Spotify and has led the company since 2006. Ek revolutionized the music industry through Spotify, and his influence will be hard to replace. Apple (NASDAQ: AAPL), which holds the second-largest share of the U.S. music-streaming market, didn't introduce Apple Music until 2015. By then, Spotify already had more than 70 million users, highlighting how early Ek positioned Spotify ahead of the streaming curve. Ek's departure isn't performance-related, and with him remaining on the board as executive chairman, the company should be able to manage the transition with limited disruption. Both Söderström and Norström have been with Spotify for more than 15 years, giving them deep institutional knowledge. Investors reacted cautiously: shares fell about 4.2% the day the news broke. The leadership change is worth watching, but it should not necessarily be a cause for alarm. Spotify Posts Large EPS Beat, But Profitability Caveats and Guidance Weigh on Shares Spotify reported solid Q3 2025 results. Revenue was €4.53 billion (approximately $5.02 billion), up 7% and modestly above consensus estimates of €4.23 billion (about $4.86 billion). Diluted earnings per share came in at €3.34 (roughly $3.83), well above expectations of €1.96 (about $2.25). The outperformance was driven in part by expansion in gross and operating margins: gross margin rose 53 basis points to 31.6%—around 50 basis points ahead of company guidance—while operating margin widened 220 basis points to 13.6%. There are important caveats, however. Management said much of the gross-margin outperformance reflected changes in estimates to "rights holder liabilities," a one-time accounting adjustment rather than an operational improvement. Also, about 40% of the operating-margin uplift was due to lower-than-expected "social charges"—expenses that can fluctuate with the company's stock price. Because Spotify's shares declined during the quarter, associated charges fell, which boosted operating margin. In short, the profitability picture is stronger on paper than it may be on an underlying basis. Those items helped inflate the EPS beat and tempered investor enthusiasm. Although Spotify added 3 million users, its Q4 revenue guidance of €4.5 billion (about $5.17 billion) was lighter than expected, and shares fell roughly 3.4% after the earnings release. SPOT's Ad-Supported Opportunity Remains Compelling Despite its scale, Spotify's ad-supported tier remains under-monetized. While roughly 63% of total users are on the ad-supported plan, that segment accounted for only about 10% of Q3 revenue. Monetizing ad-supported users more effectively would materially boost the company's revenue potential. To that end, management is revamping its ad-supported monetization strategy and expects this part of the business to reach a healthier growth rate in the second half of 2026. With shares well off their highs but substantial opportunities ahead, Spotify's long-term outlook remains positive.
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