Spotify Q3 2026 Earnings: Why the Stock Rose After an EPS Miss

Spotify stock rose after the company reported third-quarter 2026 results before the US open on Thursday, October 22, even though earnings per share (EPS) fell short of forecasts. Operating income of €672 million beat Spotify's own €670 million forecast, premium subscribers reached 306 million against a forecast of 305 million, and the fall in EPS came from finance income and tax, below the operating line.

The results reached the MoveSurge news feed at 06:03:12 ET with the stock at $517.00 in premarket trading. One minute later it traded at $523.00, up 1.16%, and at 06:14 ET it was at $543.27, up 5.08%. At 10:07 ET the stock was at $569.46, 8.40% above Wednesday's close, according to Yahoo Finance.

Where the EPS miss came from

Spotify reports in euros. Diluted EPS was €2.48, down from €3.28 a year earlier. Investing.com put the analyst consensus at 2.84 and printed both figures with a dollar sign. Operating income rose 15% to €672 million, so the decline happened further down the income statement. Finance income fell to €62 million from €262 million, and the tax line went from a €72 million benefit to a €187 million charge, about 26.5% of pre-tax income. Net income fell to €518 million from €899 million.

Part of last year's finance income was a fair-value gain on Spotify's exchangeable notes, a type of bond that can be swapped for shares. Spotify's diluted EPS calculation for the third quarter of 2025 removed €197 million of that gain, which is why diluted EPS for that quarter was €3.28 while basic EPS was €4.36. The notes no longer exist: their balance fell from €1,458 million at the end of 2025 to nil on September 30, 2026. Basic EPS this quarter was €2.52.

What the operating numbers showed

Revenue rose 16% to €4,969 million, or 14% at constant currency, which removes the effect of exchange rates. Premium revenue rose 17% to €4,487 million. Advertising revenue rose 10% to €482 million, or 9% at constant currency, after growth of 3% at constant currency in each of the first two quarters of 2026. Gross margin reached a third-quarter record of 33.0%, up 136 basis points from a year earlier; a basis point is 0.01 percentage point.

Operating income included €22 million of social charges, payroll taxes on employee share awards that rise and fall with the share price. They came in €13 million above Spotify's forecast. Free cash flow fell 9% to €735 million. Spotify said it had bought back $1.1 billion of its shares this year through October 21, enough to cancel out the dilution from its employee equity plans.

The fourth-quarter forecast

Spotify expects 818 million monthly users in the fourth quarter, about 30 million more than in the third, and 316 million premium subscribers, about 10 million more. It forecast revenue of €5.2 billion, a gross margin of 33.8% and operating income of €820 million. Finance chief Christian Luiga said on the call that advertising growth should keep moving toward double digits and that average revenue per user should grow 4.5% to 5% in the fourth quarter, helped by recent price increases and the Audiobooks+ add-on.

His advertising comment reached the MoveSurge news feed at 08:23:12 ET. The stock moved 0.38% in the next ten minutes, from $554.90 to $557.00, so most of the morning's gain came earlier, with the results themselves.

How this compares with the August report

When Spotify reported second-quarter results on August 4, the stock rose 3.04% in the first minute after the headline reached the MoveSurge news feed, from $477.48 to $492.00. It then reversed and was 3.26% lower fifteen minutes after the headline, at $461.93. That report set the third-quarter forecast of 788 million monthly users that Spotify has now met. This time the first-minute gain was smaller, at 1.16%, and the stock kept rising for the next ten minutes.