| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 29 | 28.8x | 17.8x | Bottom tier | |
Growth | 90 | 9.0% | 7.1% | Top tier | |
Quality | 81 | 27.0% | 4.5% | Top tier | |
Safety | 84 | — | 2.6x | Top tier | |
Capital Return | 83 | — | 2.12% | Top tier | |
Momentum | 40 | -28.7% | 2.9% | Bottom tier | |
Sentiment | 46 | 23 | 3 | Around median |
Estimates — analyst targets and a simplified DCF, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
Spotify Technology S.A. operates a global audio platform that brings together music, podcasts, and audiobooks, and reached approximately 777 million monthly active users and 300 million paid subscribers in Q2 FY2026. Its model relies on recurring Premium subscriptions, advertising in the free service, and paid add-ons such as Audiobooks+; features such as Reserved and AI-powered products also increase subscription value and engagement.
In Q2 FY2026, revenue reached €4.8 billion, growing 15% year over year on a constant-currency basis, compared with 14% in Q1 FY2026. Premium revenue rose approximately 16%, driven by 9% subscriber growth and a 7.4% increase in average revenue per user, while ad-supported revenue grew only 3%; automated advertising channels accounted for approximately 40% of advertising revenue, up from just over 30% in the previous quarter.
Gross margin reached a record 33.4% in Q2 FY2026, up 193 basis points year over year, and operating income reached €655 million with an operating margin of 13.7%, while free cash flow totaled €797 million, growing 14%. For FY2025, Spotify generated revenue of $17.2 billion, gross profit of $5.5 billion, net income of $2.2 billion, and earnings per share of $10.51, compared with net income of $1.1 billion in FY2024 and a loss of $532 million in FY2023.
The analyst consensus for SPOT is a buy recommendation with an average price target of $602.5, within a wide range of $530 to $720; the average is below the 52-week range high of $745, while the upper end approaches it. The 52-week range extends from $405 to $745, and the data does not provide a valid price-to-earnings multiple, so the stock's valuation rests on Spotify's ability to balance slowing user growth and AI expenses with margin expansion, while taking into account Rosenblatt's reduction of its target to $527 on August 5, 2026.
Figures in the text are as of 2026-08-26; the live price is shown at the top of the page.
Spotify generated revenue of €4.8 billion, growing 15% year over year on a constant-currency basis. Gross margin reached a record 33.4%, and operating income reached €655 million with a margin of 13.7%. Free cash flow also totaled €797 million, up 14% year over year, and the quarter ended with 300 million paid subscribers and 777 million monthly active users.
Spotify expects monthly active users to reach 788 million and paid subscribers to reach 305 million. The company guides to revenue of approximately €5 billion, equivalent to growth of 14%, and operating income of €670 million. It expects a gross margin of 32.9%, compared with 33.4% in Q2 FY2026, due to product investment and an annual regulatory fee in one market.
In Q2 FY2026, AI-powered experiences reached approximately one-quarter of active users. Approximately 14 million of the first 100 million users offered the feature used Prompted Playlists, while the company reported that Large Taste Model increased active days, Autoplay minutes, and track saves. Spotify also uses Honk and Chirp tools in development, with the ability to route tasks to paid or open-source models based on the best price-performance combination.
Automated analysis for informational purposes only — not investment advice.
The advertising business grew only 3% in Q2 FY2026, as growth in automated channels largely offset declining direct sales. Nevertheless, automated channels accounted for approximately 40% of ad-supported revenue, compared with just over 30% in Q1 FY2026, and the number of active advertisers increased 60% to 33 thousand. Management expects the business to transition to double-digit growth in the second half of FY2026 after completing the migration of advertising inventory to Spotify's internal server.
Audiobooks+ surpassed $100 million in annual recurring revenue, while audiobook adoption among Premium listeners more than doubled during FY2026, according to the August 4, 2026 call. Since Reserved launched in the United States in June 2026 with Live Nation, approximately 100 thousand tickets have been booked through Spotify, and some tours sold out their full allocations. The two products represent different paths to increasing value: a paid add-on above the subscription for Audiobooks+ and a differentiation and retention feature for Premium subscribers with Reserved.
Spotify ended Q2 FY2026 with €9.4 billion in cash and cash equivalents and no debt except lease obligations. Through August 3, 2026, the company had repurchased $662 million of shares since the beginning of the year, an increase of 30% over FY2025 levels, and since resuming the program in 2025 had purchased approximately 2.2 million shares, equivalent to approximately 1% of shares outstanding. On August 20, 2026, the board increased the authorization by $1.5 billion, bringing the remaining authorized amount to approximately $2.223 billion.
