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Additional 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 tumbling 66% in 2022, shares have risen nearly 700% through the Nov. 4 close. 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 long-time Chief Executive Officer (CEO), Daniel Ek, is stepping down. Below, we'll break down that leadership change and the latest earnings results, and explain 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, succeeding Daniel Ek, who founded the company and has served as its leader since 2006. Ek helped revolutionize the music industry with Spotify. Apple (NASDAQ: AAPL), which holds the second-largest share of the U.S. music streaming market, did not launch Apple Music until 2015. By then, Spotify already had more than 70 million users, illustrating how Ek positioned Spotify well ahead of the streaming curve. Fortunately, Ek's departure is not performance-related, and he will remain on the board as executive chairman, which should help limit disruption. Both Söderström and Norström have been with Spotify for more than 15 years and understand the business deeply. It is unclear how the CEO change will affect Spotify. Investors reacted cautiously, with shares falling about 4.2% on the day the news was released. The leadership change is worth watching, but it should not necessarily be a cause for alarm. 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% year over year and modestly above consensus of €4.23 billion. Diluted earnings per share (EPS) came in at €3.34 (approx. $3.83), a large beat versus expectations of €1.96 (approx. $2.25). The outperformance was driven by 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 to those results, however. Management said much of the gross-margin outperformance stemmed from changes to estimates for "rights holder liabilities," a one-time accounting adjustment rather than ongoing operational improvement. Additionally, roughly 40% of the operating-margin gain was attributable to lower-than-expected "social charges"—taxes tied in part to the company's stock price. Because shares declined during the quarter, those charges fell and mechanically boosted margins. In short, the profitability beat was real but partly driven by accounting and timing effects. Those factors helped inflate the EPS beat and tempered enthusiasm. Although Spotify added 3 million users, its Q4 revenue guidance of €4.5 billion (approx. $5.17 billion) was lighter than many expected, and shares fell about 3.4% after the release. SPOT's Ad-Supported Opportunity Remains Compelling Despite its scale, Spotify's ad-supported tier remains under-monetized. About 63% of the user base is on the free, ad-supported tier, yet that segment contributed only roughly 10% of total revenue in Q3. Monetizing ad-supported users more effectively would represent a substantial revenue opportunity for the company. Management is revamping Spotify's ad-supported monetization strategy and expects this part of the business to achieve healthier growth in the second half of 2026. With shares well off their lows and clear opportunities ahead, Spotify's outlook remains constructive for investors who believe the company can convert its scale into stronger monetization and sustainable growth.
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