Spotify Technology SA (NYSE:SPOT) will report earnings on November 4, with Jefferies analysts closely watching recent international price increases, expected US pricing adjustments and ad revenue growth.
The analysts have an $800 price target on Spotify, which currently trades at $645.
The music streaming service has guided total revenue of €4.2 billion, a gross margin of 31.1%, and operating income of €485 million for Q3.
“We are positive into the print as we think Q3 gross margin is at least in line versus guidance, and Q4 gross margin benefits quarter-over-quarter from international price increases, ads business seasonality, and no regulatory charge,” Jefferies wrote.
They see further upside from US price hikes expected by early 2026, projecting roughly €500 million in annual revenue uplift, alongside accelerating ad revenue.
Looking at longer-term growth, Jefferies expects Spotify’s 2026 revenue and EBITDA to come in 2% and 13% above consensus, driven by anticipated benefits from price increases, stronger ad-tier monetization, subscriber growth from Epic and Apple integrations, and the potential for additional revenue from ALC offerings.
The analysts also expect continued margin expansion, tempered by recent investments in initiatives such as the Partner Program and video content.
Jefferies flagged that the market will likely focus on subscriber trends, particularly internationally.
Spotify has guided total monthly active users of 710 million for Q3, implying the addition of approximately 14 million net new MAUs during the quarter. Total premium subscribers were guided at 281 million, implying the addition of approximately 5 million net new subscribers during Q3.
“Our checks suggest Q3 subscribers in-line versus guide with an upside case of 1 million beat,” Jefferies wrote. “Incrementality of recent international price increases and timing of US price hikes are big debates right now following new deals with labels.”
They also noted investor interest in Spotify’s AI and ads strategy, citing potential commentary on AI music creation initiatives.