How Will Spotify’s AI Shift Power Its Next Phase of Growth?

Spotify released its financial results for the fourth quarter of 2025, reporting growth across revenue, operating income and subscriber numbers alongside an update on its strategic direction.

Executives detailed the financial standing of the business and discussed operational shifts regarding the integration of AI within its engineering teams during the earnings call.

According to the earnings release, total revenue grew 13% year-over-year on a constant currency basis to €4.5bn (US$5.3bn). The data indicated that gross margin improved to 33.1% and operating income reached €701m (US$829m).

Regarding user engagement, the company reported that Premium subscribers increased 10% year-over-year to 290 million, while Monthly Active Users rose 11% to 751 million.

Financial results drive ambition

Co-CEO Alex Norström signalled that the company intends to accelerate further in 2026. He stated: "We're framing 2026 as the year of raising ambition," after describing 2025 as the "year of accelerated execution".

Founder and Executive Chairman Daniel Ek linked the company's trajectory to broader shifts in media and technology. He said: "The next wave of technology shifts, including AI, new interfaces, wearables and new ways of interacting with content, will reshape how people discover and experience audio and media."

AI transforms operations

Alongside the financial update, Spotify’s Co-CEO Gustav Söderström revealed a significant shift inside the company where senior developers are no longer writing code themselves.

While a coder who doesn't code might traditionally be seen as underperforming, at Spotify it now signals peak productivity powered by AI.

Speaking during the earnings call, Gustav noted that some of Spotify's top engineers have effectively stepped away from manual coding and now rely on AI systems to generate it for them. Their role is to guide, prompt and oversee the output rather than type it line by line.

Gustav elaborated on this transition, stating: "When I speak to my most senior engineers, the best developers we have, they actually say that they haven't written a single line of code since December 2025. They actually only generate code and supervise it."

He described the Christmas period as a "singular event in terms of AI productivity" where new tools and model updates dramatically improved performance, noting that "we crossed the threshold where things just started working".

While some engineers elsewhere have raised concerns about reviewing large volumes of AI-generated code, Gustav emphasised the upside in output and speed.

"That is the opportunity we see in front of us," he said. "Companies such as us are simply going to produce massively more software. Up until our limiting factor is actually the amount of change that consumers are comfortable with."

Competition requires agile strategy

Gustav made clear that the adoption of AI-driven development is central to remaining competitive. "There is going to have to be a lot of change in these tech companies if you want to stay competitive, and we are absolutely hell-bent on leading that change," he said.

He noted that the transition could be painful for many companies because engineering, product and design practices will change.

He cautioned that the industry is still mid-transition, requiring agility as "the things you build now may be useless in a month".

Gustav added: "We consider ourselves the R&D department for the music industry. Our job is to understand new technologies quickly and capture their potential."

The executive concluded his remarks by suggesting that the shift in engineering practices could have wider industry implications. "The entire industry stands to benefit from this [AI] paradigm shift but we believe those who embrace this change and move fast, will benefit the most."