Recurring Revenue Stocks: Here’s Why Investors Prize Them, and 8 Companies That Embody the Model

Recurring revenue stocks occupy a privileged position in modern equity markets, and deservedly so. When a company converts a large share of its revenue into predictable, subscription‑based inflows, the valuation framework changes. Cash flows become more stable, operating leverage becomes more visible, and management gains the ability to plan multi‑year investment cycles with confidence. Investors, in turn, reward that stability with higher multiples.

The logic is simple enough, but the underlying mechanics deserve a closer look. As goes without saying, a business that earns most of its top line from monthly or annual contracts is not forced to “re‑sell” its product every quarter. And once the deals are signed, it becomes self-reinforcing. Spotify is the case in point. Its premium subscriptions, for example, generated €15.39bn in 2025, representing roughly 89% of total revenue.

Moreover, its 761m monthly active users and 293m premium subscribers in Q1 2026 illustrate this dynamic: the conversion funnel stabilises, churn becomes predictable, and incremental growth comes from new markets rather than expensive reacquisition campaigns. And importantly, they can raise prices periodically (or just crack down on password sharing) and there is the risk of cancellations, but it is not as bad as it’d be if it was non-recurring.

It is easy to think of software stocks but it can apply to other business models like entertainment, fitness, education, gaming, and audio. The following nine companies illustrate the breadth of the recurring‑revenue universe — and the different ways it can be built.

Here are 8 of the most predominant recurring revenue stocks!

1. Spotify

Spotify is one of the purest subscription businesses in global media. In 2025, total revenue reached €17.19bn, with premium subscriptions contributing €15.39bn and ad‑supported revenue €1.80bn. Premium therefore accounts for roughly 89% of revenue, making Spotify’s recurring base unusually large.

The company ended Q1 2026 with 761m monthly active users and 293m premium subscribers, a conversion rate of 38.5%. Price increases across major markets in 2024–2025 stuck, churn remained contained, and audiobooks added perceived value to the bundle. Operating leverage is now visible: Spotify generated €2.2bn in operating income in 2025, its strongest year on record.

The recurring‑revenue engine is therefore both large and improving. The challenge is ARPU compression in emerging markets, but the scale of the installed base offsets this pressure.

2. Netflix

Netflix is the archetype of a global subscription business. In 2025, streaming revenue reached US$45.18bn, representing 100% of total revenue. The company’s ad‑supported tier adds incremental revenue but does not change the fundamental subscription structure.

The paid‑sharing crackdown in 2023–2024 added more than 20m incremental subscribers, according to industry estimates, and created a new “extra member” revenue line. By late 2025, Netflix had more than 300m paid subscribers and an estimated 700m total audience including extra‑member accounts.

Operating margins exceeded 28% in 2025, supported by content leverage and the economics of the ad tier. Netflix’s recurring‑revenue model is therefore not only large but also highly profitable.

3. Disney

Disney is more diversified than Spotify or Netflix in having physical theme parks as well as stores, but its Entertainment segment is anchored by recurring subscription and affiliate fees. In Q1 FY2026, Entertainment generated US$10.9bn in revenue, with subscription and affiliate fees contributing US$7.3bn — roughly 44% of the segment’s total.

Disney+, Hulu, and ESPN+ form the core of this recurring base. While the company does not disclose ARR in the same way as pure‑play SaaS businesses, the subscription economics are clear: recurring digital revenue is now one of Disney’s largest drivers, alongside Parks and Experiences.

The challenge is margin pressure from content costs, but the recurring base provides stability that Disney lacked in the pre‑streaming era.

4. Duolingo

Duolingo is one you may not know was listed – or at least you were less likely to know was listed than the 3 mentioned above. Its model blends freemium scale with subscription monetisation. Industry analysis places Duolingo’s ARR at roughly US$360m, with approximately 80% of revenue subscription‑based. The company’s paid subscriber base continues to grow, supported by habit‑forming design, gamification, and aggressive A/B testing (more than 500 tests per quarter).

Duolingo’s economics differ from enterprise SaaS: CAC is low because most users arrive organically, and LTV is driven by long streaks and daily engagement. The recurring‑revenue engine is therefore smaller than Spotify’s or Netflix’s but highly efficient.

5. Peloton

Peloton’s subscription business remains the economic centre of the company. In Q3 FY26, subscription revenue reached US$428m, compared with US$202.9m from Connected Fitness products — meaning subscriptions accounted for roughly 68% of total revenue that quarter.

Churn averaged 1.9% per month in Q2 FY26, even after price increases, demonstrating strong retention. Peloton’s recurring‑revenue engine is therefore stable, though subscriber counts have declined from pandemic highs. The company’s strategy now emphasises content, partnerships (including Spotify), and commercial distribution.

6. Planet Fitness

Planet Fitness is a physical‑world subscription business – the New Hampshire-headquartered company has over 2,700 clubs worldwide. At year‑end 2025, the company had 20.8m members and 2,896 clubs, generating US$1.3bn in revenue and US$5.3bn in system‑wide sales. Membership dues are monthly and recurring, with Black Card penetration reaching 66.5% in 2025.

Attrition averaged 3–4% per month in early 2026, consistent with historical norms. The franchise model converts physical scale into recurring revenue, producing strong operating leverage: corporate‑owned clubs achieved a 37.8% segment EBITDA margin in 2025.

Planet Fitness is therefore the clearest cut case study to rebut anyone suggesting recurring revenue cannot be built outside software and media.

7. Coursera

Coursera’s recurring‑revenue engine is concentrated in its Enterprise segment. In Q3 2025, Enterprise ARR reached US$221.7m, though this figure declined slightly year‑on‑year due to mixed enterprise demand. By Q1 2026, total revenue reached US$195.7m, with strong consumer momentum and more than 205m cumulative learners.

The company’s planned combination with Udemy is expected to create approximately US$115m of annual run‑rate cost synergies and roughly 20% enterprise ARR overlap, according to management commentary.

Coursera’s recurring base is therefore meaningful but still evolving, with enterprise retention the key variable.

8. Udemy

Udemy is another online course provider. It has a focus on enterprises and this segment segment is now the company’s largest recurring engine. In 2025, Udemy Business ARR reached US$540m, up 4% year‑on‑year, with consolidated subscription revenue representing 72% of total revenue. Net dollar retention stabilised at 97% for large customers, indicating strong LTV dynamics.

Consumer subscriptions also grew 44% year‑on‑year, reaching 343,000 paid subscribers by Q4 2025. Udemy’s pivot toward subscription monetisation has therefore transformed its revenue mix, making it one of the most subscription‑heavy education platforms globally.