Spotify disclosed on February 10 that its most skilled engineers haven’t written a single line of code since December, relying as a substitute on an inside AI system constructed on Claude Code to deal with all improvement work. Co-CEO Gustav Söderström revealed throughout the firm’s fourth quarter 2025 earnings name that builders now handle all the coding course of from their cellular gadgets throughout morning commutes – fixing bugs, including options, and deploying updates earlier than arriving on the workplace.

The streaming platform achieved file month-to-month energetic person progress of 38 million throughout the quarter ended December 31, reaching 751 million complete customers whereas producing €701 million in working earnings. Premium subscribers grew 10% year-over-year to 290 million, whereas complete income elevated 13% on a relentless forex foundation to €4.5 billion. The disclosure highlights how synthetic intelligence has basically altered software program improvement practices at one of many world’s largest client expertise firms.

Distant code deployment by messaging platform

“An engineer at Spotify on his morning commute, from Slack on his cellphone, can inform Claude to repair a bug and add a brand new characteristic to the iOS app,” Söderström defined throughout the February 10 earnings name. “As soon as Claude finishes that work, the engineer will get a brand new model of the app pushed to him on Slack to check, in order that he can then merge it to manufacturing – all earlier than he is even arrived on the workplace.”

The interior system, which Spotify calls “Honk,” allows builders to instruct AI brokers remotely utilizing pure language instructions by the corporate’s messaging infrastructure. Based on Söderström, AI companions have characterised Spotify’s implementation as “business main.” The platform represents a considerable departure from conventional software program improvement workflows that required engineers to jot down, check, and deploy code manually by built-in improvement environments.

Söderström emphasised that Spotify’s most senior engineers – the builders with the deepest technical experience – have utterly transitioned to AI-generated code supervised by human evaluation. “After I communicate to my most senior engineers, the very best builders we now have, they really say that they haven’t written a single line of code since December,” he said. “They really solely generate code and supervise it.”

The timeline coincides with the December 2024 launch of Anthropic’s Claude Opus 4.5 and Claude Code capabilities. Trade observers famous related productiveness shifts throughout expertise firms following these releases, although few organizations have publicly disclosed full transitions away from guide coding amongst senior engineering employees.

Monetary efficiency exceeds steerage throughout metrics

Spotify exceeded steerage throughout all key efficiency indicators for the fourth quarter. The corporate added 38 million month-to-month energetic customers versus steerage of 32 million, whereas premium subscriber internet additions of 9 million surpassed forecasts by 1 million. Income matched steerage at €4.5 billion, representing accelerated 13% year-over-year progress on a relentless forex foundation.

Gross margin reached a file 33.1%, up 83 foundation factors year-over-year and exceeding steerage by 20 foundation factors. The ad-supported business showed signs of recovery, with income rising 4% year-over-year on a relentless forex foundation to €518 million after declining in previous quarters.

Working earnings of €701 million exceeded forecast by €81 million, with social fees €67 million under expectations on account of share value actions throughout the quarter. The corporate generated €834 million in free money movement, bringing full-year 2025 free money movement to €2.9 billion. Money and short-term investments totaled €9.5 billion at quarter finish.

Co-CEO Alex Norström framed 2025 because the “Yr of Accelerated Execution” whereas positioning 2026 because the “Yr of Elevating Ambition.” The corporate scheduled an investor day for Might 21, 2026 in New York to element longer-term strategic priorities. Spotify repurchased $433 million in shares throughout the quarter, bringing full-year 2025 repurchase exercise to $510 million.

Promoting transformation progressing regardless of headwinds

Spotify’s advertising business demonstrated improvement following challenges earlier in 2025. Advert-supported income grew 4% year-over-year on a relentless forex foundation, accelerating from flat progress within the third quarter. Excluding results of podcast optimization methods, the corporate achieved roughly 7% promoting progress.

Norström expressed confidence within the promoting transformation regardless of near-term execution challenges. “We now have file ranges of advertisers on the platform,” he said. “And that elevated density means significantly better yield and in consequence, income progress for us.” The corporate expects additional promoting progress acceleration within the second half of 2026 as automated buying tools acquire extra market adoption.

The platform launched its Spotify Ad Exchange in April 2025, enabling programmatic shopping for by real-time auctions. Partnerships with demand-side platforms together with Google’s Show & Video 360 and Magnite present advertisers with enhanced concentrating on and measurement capabilities. The transformation required deep infrastructure modifications, which Norström acknowledged created “ache” throughout the transition interval.

Advert-supported month-to-month energetic customers reached 476 million, rising 12% year-over-year. The ad-supported gross margin improved to 19.5%, up 441 foundation factors year-over-year, pushed by enhanced contribution from podcasts and music. Norström indicated that whereas work stays, the corporate sees “very optimistic indicators” in promoting efficiency developments.

Music business payouts attain file $11 billion

Spotify distributed greater than $11 billion to music rights holders throughout 2025, establishing a brand new file for annual funds from a single supply to the music business. Impartial artists and labels accounted for half of all royalties paid. The cumulative complete since Spotify’s founding approached $70 billion.

“We paid out over $11 billion to the music business in 2025 – the most important annual cost to music creators in historical past,” Norström said. The disclosure underscored Spotify’s place because the dominant monetary contributor to recorded music monetization globally. The corporate additionally facilitated over $1 billion in ticket gross sales by connecting followers with stay exhibits by ticketing partnerships.

Video podcast consumption increased more than 90% for the reason that January 2025 launch of the Spotify Accomplice Program. The platform now hosts greater than 530,000 video podcast exhibits. The Accomplice Program distributed over $100 million to podcast publishers and creators globally throughout the first quarter 2025, with creator payouts growing 300% in January in comparison with the earlier yr.

Audiobooks in Premium expanded to Sweden, Denmark, Finland, Iceland, and Monaco throughout the quarter. Main international publishers credited Spotify with attracting new listeners and driving double-digit audiobook progress. The corporate emphasised that audiobooks characterize a considerable progress alternative with important market enlargement potential remaining.

Wrapped marketing campaign drives file subscriber consumption

Spotify’s annual Wrapped marketing campaign delivered file engagement, with greater than 300 million customers collaborating and 630 million social media shares throughout 56 languages globally. The marketing campaign marked the best single day of subscriber consumption in Spotify’s historical past on day one of many December rollout.

“Whereas we noticed spectacular engagement in 2024, we additionally obtained suggestions on the person expertise,” Norström defined. “So this yr, we turned up the dial.” The 2025 implementation achieved 20% larger person engagement and 42% extra social media shares in comparison with the earlier yr. The corporate emphasised that Wrapped serves as a vital person acquisition and retention mechanism.

Enhanced cellular free tier options launched globally throughout the third quarter contributed to the 38 million month-to-month energetic person additions within the fourth quarter. The enhancements present ad-supported customers with expanded controls to look and play particular tracks and entry songs shared by buddies. These free tier enhancements supported the file MAU progress whereas strengthening the conversion funnel for premium subscriptions.

The corporate launched over 50 product options throughout 2025, together with Prompted Playlist, Web page Match for audiobooks, About This Track, mixing instruments, and lossless audio streaming. Söderström characterised the innovation tempo as demonstrating profitable execution on bold product improvement targets.

AI brokers allow pure language music discovery

Spotify positioned itself as constructing “the world’s most clever, agentic media platform” by AI-powered options that allow pure language interplay. The corporate’s AI DJ characteristic has been utilized by roughly 90 million subscribers, producing over 4 billion hours of engagement. The just lately launched Prompted Playlist device permits Premium customers to create customized playlists utilizing pure language descriptions.

“If AI DJ is the chat interface to Spotify, the place you may discuss casually, Prompted Playlists is the Deep Analysis mode of Spotify,” Söderström defined. “It helps you to describe and set guidelines on your personal customized playlists – actually writing your individual algorithm.” The characteristic integrates customers’ full Spotify listening historical past with real-time cultural developments from the web.

The blending instruments reached 50 million created playlists with customers making greater than 1 million transitions every day. Söderström emphasised that these engagement patterns show customers wish to “actively take part within the music” somewhat than passively devour content material. This behavioral shift creates datasets mapping pure language to music preferences that Spotify believes offers aggressive differentiation.

“This can be a very particular dataset,” Söderström famous. “Chances are you’ll suppose it’s a canonical dataset, that means there’s a factual reply to what’s exercise music. There is no such thing as a factual reply to what’s exercise music. Style is just not a truth. It’s an opinion.” He emphasised that regional and particular person variations in music style preferences require a whole bunch of hundreds of thousands of listeners always offering suggestions – knowledge that can not be commoditized by normal giant language fashions.

Developer productiveness transformation raises questions

The whole transition away from guide coding amongst Spotify’s senior engineers represents a major departure from business practices documented in current analysis. A research printed January 29, 2026 by Anthropic found that developers using AI assistance scored 17% lower on coding comprehension tests regardless of finishing duties barely sooner.

Söderström acknowledged that engineering practices “will change” and urged the transformation “might be painful for a lot of firms.” He emphasised that Spotify has been making ready for AI-driven improvement “for a minimum of one and a half years” and views the modifications as creating alternatives somewhat than dangers. “Software program firms will begin producing enormously extra quantity of software program,” he predicted.

The implementation permits builders to delegate full coding duties to AI brokers whereas sustaining supervisory oversight. Research published January 5 found that 77% of professional developers rated their enjoyment working with brokers as “happy” or “extraordinarily happy” whereas constantly sustaining oversight of software program design somewhat than delegating full authority.

Söderström urged that productiveness beneficial properties allow Spotify to extend software program output till “the limiting issue is definitely the quantity of change that customers are comfy with” somewhat than engineering capability. The corporate shipped over 50 new options in 2025 and expects to speed up improvement velocity additional in 2026.

First quarter steerage tasks continued progress

Spotify forecasted 759 million month-to-month energetic customers for the primary quarter 2026, implying internet additions of 8 million. Premium subscribers are anticipated to achieve 293 million, representing internet additions of three million – inside historic ranges for the seasonally smaller first quarter. Complete income steerage of €4.5 billion represents improved progress of roughly 15% year-over-year versus the 13% achieved within the fourth quarter.

The corporate expects common income per person progress within the 5% to six% vary, supported by current value will increase. Gross margin is forecast at 32.8% with working earnings of €660 million. Social fees are included at €10 million based mostly on the fourth quarter closing share value of $580.71.

Chief Monetary Officer Christian Luiga indicated that each gross margin and working margin are anticipated to enhance all through 2026, although quarterly development might differ relying on funding timing in core product improvement and monetization initiatives. Free money movement is projected to “meaningfully exceed” 2025 outcomes whereas reflecting development towards a normalized long-term tax charge.

Foreign money headwinds proceed affecting reported outcomes. The primary quarter income outlook incorporates roughly 670 foundation factors of headwind in comparison with prior yr trade charges, versus the 580 foundation factors skilled within the fourth quarter. The strengthening greenback creates ongoing challenges for euro-denominated monetary reporting.

AI music creation presents alternatives and challenges

Söderström outlined Spotify’s perspective on synthetic intelligence in music creation, figuring out two distinct classes: artists making unique music from scratch and new variations of present music akin to covers or remixes. The primary class represents “lots of internet new music and extra content material than ever being delivered to Spotify,” which Söderström characterised as helpful as a result of rising catalogs drive person acquisition, engagement, and fandom improvement.

“Whereas the music could also be generated on varied AI platforms, the purpose is that no matter the place the music is made, the cultural second all the time occurs on Spotify,” he said. “That’s the place all music charts and finds an viewers.” The corporate’s place facilities on being the platform the place music achieves cultural relevance somewhat than essentially being the creation platform.

The second class – derivatives of present music – represents an untapped monetization alternative for artists. “In different media, like films and TV, present IP is extremely useful,” Söderström famous. “However in music, artists have not had an actual strategy to monetize present catalog by AI as a result of the absence of a rights framework has saved AI principally centered on net-new creation.”

Spotify indicated it has developed expertise and capabilities to allow derivatives “in a means that’s additive for each IP rights holders and Spotify.” The corporate emphasised working with artists somewhat than circumventing them. “Many artists and business companions see this chance and we’re already working with them on realizing it,” Söderström said.

The platform doesn’t disclose what share of uploaded music is AI-generated however indicated it focuses on enabling creator alternative about instruments used. Spotify has applied programs permitting creators and labels to incorporate metadata about how music was created, which may be surfaced to listeners by options like About This Track.

Lengthy-term technique emphasizes expertise platform identification

Daniel Ek, who transitioned from CEO to Government Chairman efficient with the fourth quarter outcomes, emphasised three core rules for evaluating Spotify: fixing issues on the intersection of shoppers and creators, sustaining identification as a expertise firm first, and taking part in for long-term worth creation.

“Right now, what we have actually constructed is a expertise platform for audio – and more and more, for all of the methods creators join with audiences,” Ek said. “The subsequent wave of expertise shifts – AI, new interfaces, wearables, new methods of interacting with content material – these will reshape how folks uncover and expertise audio and media.”

Ek characterised Spotify’s function as “the R&D arm for the music business” and emphasised that the corporate’s capabilities now lengthen far past music into podcasts, audiobooks, and rising content material codecs. He highlighted long-term bets together with the 2014 acquisition of Echo Nest for machine studying capabilities and the event of Spotify Join for ubiquity throughout greater than 2,000 gadgets from over 200 manufacturers.

The management transition to co-CEOs Alex Norström and Gustav Söderström was characterised as emphasizing synchronized operations and deliberate planning. Each executives have been central to main platform shifts together with cellular, subscriptions, machine studying, podcasts, and audiobooks. “They did not inherit Spotify. They helped construct it,” Ek said.

Working bills declined 10% year-over-year within the fourth quarter, although excluding forex actions and social fees, bills elevated roughly 13% pushed primarily by advertising and personnel prices. The corporate employed 7,323 full-time workers globally at quarter finish. Administration emphasised that reinvestment within the enterprise stays the first capital allocation precedence whereas share repurchases tackle dilution.

Timeline

Abstract

Who: Spotify Expertise S.A. introduced fourth quarter 2025 earnings affecting 751 million month-to-month energetic customers, 290 million Premium subscribers, and seven,323 workers globally. Co-CEOs Alex Norström and Gustav Söderström led the earnings name following Daniel Ek’s transition to Government Chairman.

What: The streaming platform disclosed that senior engineers stopped writing code manually in December 2025, utilizing solely AI-generated code by an inside system known as Honk constructed on Claude Code. Spotify achieved file quarterly person progress of 38 million MAU, €701 million working earnings, and €4.5 billion income rising 13% year-over-year on a relentless forex foundation. The corporate paid $11 billion to music rights holders throughout 2025.

When: Outcomes cowl the quarter ended December 31, 2025, introduced February 10, 2026. The transition to AI-only coding occurred in December 2025 following the discharge of Claude Opus 4.5. First quarter 2026 steerage tasks continued progress throughout person and monetary metrics.

The place: Spotify operates globally with 751 million month-to-month energetic customers throughout all areas demonstrating year-over-year and quarter-over-quarter progress. The corporate employed 7,323 full-time workers at quarter finish and maintains €9.5 billion in money and short-term investments.

Why: The AI coding implementation goals to speed up software program improvement velocity past human capability constraints. Administration positioned the expertise transformation as important for sustaining aggressive benefit as synthetic intelligence reshapes media platforms. The corporate believes its expertise platform identification, mixed with logged-in person knowledge and established enterprise fashions in subscriptions and promoting, place it favorably to profit from AI disruption somewhat than face displacement dangers.


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