Spotify just dropped its Q3 2025 earnings, and the Street's buzzing. Profit's up 200% to €899 million, revenue climbed 7.1% to €4.27 billion, and margins rebounded to 31.6%. Monthly active users (MAUs) hit 713 million. All good, right? The stock even surged nearly 70% over the past year. Maybe not. The stock dipped over 5% after the report. Wall Street's reaction is… muted, to say the least. And then there's the small matter of Daniel Ek stepping down as CEO at the end of the year. Are these numbers a genuine reflection of Spotify's health, or are they obscuring a more complex reality as Ek prepares his exit?

The Numbers Game: Profit vs. Perception

Let's dive into the numbers. A 200% jump in profit is eye-catching, no doubt. But it's crucial to consider the context. Last year's Q3 profit was €300 million; this year it's €899 million, or €3.28 per share compared to €1.45 per share. That’s a significant leap, but it’s also worth noting that analyst expectations were relatively low, around €2.14 per share. So, while Spotify beat estimates, the bar wasn't set particularly high.

The revenue increase of 7.1% to €4.27 billion is solid, surpassing the expected €4.23 billion. But let's be real: in the tech world, 7% growth is hardly earth-shattering. It's respectable, sure, but it doesn't scream "hypergrowth." The margin rebound to 31.6% is a positive sign, suggesting cost controls are working. But can they sustain it? The company credits higher ad revenue, but ad revenue is notoriously cyclical and dependent on broader economic conditions. I’ve looked at hundreds of these earnings reports, and the reliance on "cost control" always makes me nervous – where are they cutting, and what’s the long-term impact?

Then we get to the user growth. 713 million MAUs is impressive, exceeding the projected 711 million. Premium subscribers are up to 281 million, and ad-supported users reached 446 million. But here’s the thing: user growth doesn't automatically translate to profitability. Spotify has been aggressively pushing price increases, and that's likely contributing to the revenue boost. But how much higher can they push prices before users start jumping ship to competitors like Apple Music or Amazon Music?

The Leadership Shuffle: Stability or Uncertainty?

Now, let’s talk about the elephant in the room: Daniel Ek stepping down as CEO. He’s transitioning to executive chairman, and Gustav Söderström and Alex Norström will become co-CEOs. Wall Street seems to be spinning this as a move toward stability, formalizing a structure that's supposedly been in place since 2023. But I’m not entirely convinced.

Why now? Ek claims the company is "well-positioned to deliver growth and improving margins in 2025." If that's the case, why step aside? Is he sensing headwinds that aren't immediately apparent in the numbers? Or is this a carefully orchestrated exit strategy, leaving the co-CEOs to navigate a potentially turbulent future? It's hard to say, but the timing is certainly… interesting.

Spotify's Q4 forecast projects revenue of €4.5 billion, slightly below the €4.57 billion analysts were hoping for (currency pressures are being blamed). MAUs are expected to reach 745 million, and premium subscribers should total 289 million. Gross margin is projected to rise to 32.9%, and operating income is anticipated at €620 million, ahead of consensus. The planned U.S. price increase in late 2025 or early 2026 could further bolster margins, but that's just speculation at this point.

One potential bright spot is Spotify's partnership with Netflix to stream video podcasts. This could diversify revenue streams and attract new users, but it's still early days. How many users are actually tuning in to these podcasts? What are the demographics? The company hasn't released any concrete data on this yet, so it's difficult to assess the true impact.

Spotify's stock performance is undeniably strong, with a 43.97% year-to-date return and a 67.51% increase over the past year. But past performance is not indicative of future results. And the market's initial reaction to these earnings—a 5% drop—suggests that investors are not entirely sold on the long-term sustainability of Spotify's growth.

A CEO's Exit Strategy, Disguised as a Victory Lap?

The numbers paint a picture of a company that's performing reasonably well, but not spectacularly. The leadership transition adds a layer of uncertainty. While Wall Street may be framing it as a positive move, I suspect there's more to the story than meets the eye. The question isn't whether Spotify had a good quarter; it's whether these gains are sustainable under new leadership, and whether Ek is leaving at the peak…or just before the slide.