Spotify Technology SA (NYSE:SPOT) Set ambitious financial targets by 2030 and announced new product initiatives at its investor day, which received a positive response from UBS analysts.
The company outlined mid-teens constant-currency revenue compound annual growth rates with a gross margin target of 35-40% and operating margin above 20% by 2030, rising to 32% and 13%, respectively, in 2025.
UBS noted that the targets largely came ahead of Street consensus, with the firm projecting revenue growth of 14% versus Street estimates of 12% and gross margin of 37% versus Street estimates of 36%.
Management said growth will be driven by improved pricing, new subscription tiers and continued conversion of free users to premium from a still under-penetrated global base of approximately 3.5% of the global population. The company expects to reach one billion MAUs before 2030, with double-digit ad revenue growth starting in the second half of 2026.
A major announcement was the launch of Remix, a new paid add-on developed in partnership with Universal Music Group that will allow fans to create AI-generated covers and derivative works while sharing the economics with rights holders. Pricing was not disclosed, although management said the initiative is expected to be margin neutral for growth and does not require the participation of all major labels. UBS said it expects to reach a deal with Warner Music Group before the end of the year.
Additional announcements include new audiobooks add-ons, Spotify Reserved for live event ticket access, and expanded AI-powered features including prompted playlists and an agentic tool called Save to Spotify. Management designed the next phase of growth around monetization through pricing, add-ons, and AI tools driven by a proprietary “big taste model.”
UBS said margin improvement is expected to be driven by growth in the company’s marketplace business, which has quadrupled since 2021, and a mix shift toward higher-margin content formats, with long-term podcast gross margins targeted at around 40%.
UBS maintained its buy rating and $735 price target on Spotify shares based on 29x forward EBITDA, saying the investor day provided more clarity on the monetization path in line with Street expectations.