Spotify soars 15% after announcing AI music deal with UMG, guidance

The company expects revenue at a compounded annual growth rate in the mid-teens and gross margins between 35% and 40%. Spotify referred to plans to reach 1 billion subscribers and $100 billion in revenue as its “north star.”

As part of the deal with Universal, Spotify will let users create covers and remixes using the voices of artists and songwriters who opt in. Spotify said the tool will launch as a paid add-on for premium users and offer a new revenue stream for artists.

“Today, there is no media player for both public and private content – or put differently – there is no media player for the generative era,” co-CEO Gustav Söderström told investors on Thursday at its first investor day since 2022. “We believe Spotify will become that.”

Spotify is in the middle of a reshuffle, and the stakes are high.

Shares have lost a quarter of their value over the last year. This is the first investor day for the company in four years and under the direction of its new co-CEOs, Söderström and Alex Norström. Founder and former CEO Daniel Ek stepped down at the start of this year after about two decades at the helm.

Spotify is also trying to prove it can be more than a music streaming platform as it bets on verticals like audiobooks and podcasts.

Record labels are grappling with how to protect artists from copyright infringement as platforms that generate music through prompts rise in popularity, blurring the lines between AI and human-made music.

Lawsuits have already emerged within the industry.

In 2024, Warner Music, UMG and Sony sued AI music startups Suno and Udio, alleging the companies used copyrighted songs to train their AI models.

Suno, which raised $250 million in November, settled with Warner Music last year and signed an agreement that let users create AI-generated music featuring participating artists. Universal and Warner both settled with Udio.

Spotify also announced subscriptions for certain creators on the platform and updates to its audiobook feature. The company also launched a program that lets certain megafans buy two concert tickets before they go on sale to the public.

Since 2022, Spotify said it’s added more than 340 million new users to the platform and has grown its subscriber base by more than 110 million.