Spotify: Closing out an investment year, gearing up to harvest

Bernstein previews Spotify's Q3 results and Q4 guidance ahead of the print, maintaining its Outperform rating and price target. Spotify is expanding Audiobooks+ to its remaining Premium markets, rolling out the Spotify Partner Program to new regions across Europe and Latin America, and continuing to commercialize AI features; these initiatives broaden content and engagement and open additional monetization avenues, but also carry incremental content and infrastructure costs plus user-facing token costs tied to AI features. Management is expected to guide Q4 subscribers, MAUs and revenue solidly, though gross margin guidance may be conservative given the variability of AI-related costs. Separately, the Phono Records V proceeding will set U.S. mechanical royalty rates for 2028-32;