Spotify Technology SA (NYSE: SPOT) has received a Buy rating from UBS due to its strong revenue growth momentum and positive performance expectations for 2024 and 2025.

The company has experienced a 20% increase in top-line revenue over the past year, along with significant expansion in gross margins and free cash flow.

UBS predicts that Spotify will continue to grow its revenue by over 13% in 2025, driven by the addition of 23 million premium subscribers. This growth is slightly lower than the 24 million added in 2024. UBS also highlights Spotify's commitment to improving its product offerings, which will support future monetization strategies and contribute to long-term financial goals.

The firm estimates that gross margins will rise by approximately 230 basis points to 32.3%, although the pace may slow due to investments in Spotify's partner program. Additionally, UBS projects that free cash flow will increase to €3.0 billion in 2025, up from €2 billion in the previous year.

Potential growth catalysts for Spotify include the launch of premium and superfan tiers, possible price hikes linked to new features, adjustments to family plan structures, and improved advertising trends as programmatic partnerships expand.