- Spotify posted a profit of €545 million, or €2.61 per share, as revenue grew 14% to €4.8 billion
- Wall Street was expecting earnings of €2.80 per share and revenue of €4.79 billion
- Shares of the music streaming giant fell over 5% in pre-market trading on Tuesday following the results on a weaker-than-expected growth forecast
Shares of Spotify fell over 5% in pre-market trading on Tuesday after a weaker-than-expected forecast overshadowed the company’s milestone of 300 million premium subscribers globally.
The music streaming giant added a total of 7 million in its second quarter, representing 9% growth year over year. It also added 16 million monthly active users for a total of 777 million, growing 12% but coming in slightly below guidance of 17 million additions. Ad-supported monthly active users grew 14% to 494 million.
Overall, the company posted a profit of €545 million, or €2.61 per share, as revenue grew 14% to €4.8 billion. Despite a 3% increase in operating expenses driven by “temporary investments in marketing and cloud/AI spend,” operating profit jumped 61% to €655 million.
The increase in total revenue was driven by 15% growth in premium revenue from the subscriber gains and an improvement in average revenue per user from price increases. Also contributing was a 1% increase in ad revenue, driven primarily by the company’s automated sales channels, as well as growth in music and podcast advertising.
During its second-quarter earnings call, Spotify co-CEO Alex Norström touted “a scale that few companies in history have reached,” and a “healthy and compounding” business.
“Spotify lives across your whole day — the commute, the workout, studying, gaming, the dinner table, and sleep. At our scale, that is rare,” he aded. “Our position gives us an opportunity space as wide as our users want it to be. At the investor day, we told you where Spotify is going, and this quarter we’re building momentum behind that.”
But executives warned that it would incur approximately $200 million in additional operating expenses for the full year due to its investments in marketing and AI, which they said are “entirely in our control” and are expected to moderate on a year-over-year basis in the fourth quarter. They also said next quarter’s MAU results would reflect “increased friction” in its free service due to adjustments to its product and ad load, but argued it’s “well worth it.”
“The free-to-paid conversion cycle in emerging markets grows differently than our established markets. So while a move like this one will take time to play out, the opportunity is vast,” Norström added. “This will be additive to our potential over time. We do not expect it to come at the expense of our subscriber growth.”
Looking ahead at the third quarter, Spotify executives said they are well positioned to deliver improved growth and margins in 2026 as the company reinvests to support its long-term potential. The company is forecasting a total of 305 million premium subscribers and 788 million MAUs, operating income of €670 million and revenue growth of 14% to €5 billion.
The latest quarterly results come as Spotify made several new announcements during its Investor Day presentation in May, including creator memberships, Personal Podcasts and its Reserved ticket offering. It also unveiled new higher-hour add-on tiers for the platform’s audiobook option, Family and Student audiobook plans and Studio by Spotify Labs.
Since launching with Live Nation in the U.S., nearly 100,000 tickets have been reserved through Spotify across multiple tours. More than 500 million Spotify users have streamed a video podcast, with consumption up more than 140% since the launch of the company’s Partner Program. In total, the streaming giant has 7 million podcast titles and over 700,000 audio book titles.
In addition, Spotify has reached licensing deals with Universal Music Group and Merlin that enable fans to legally create covers and remixes from participating artists’ and songwriters’ catalogs, with both the original performing artist and songwriter sharing in the value created.
It also expanded its DJ feature to four new languages: French, German, Italian and Brazilian Portuguese. Since its 2023 launch, DJ has delivered a more personalized listening experience to nearly 100 million Premium users, combining tailored music recommendations with AI-generated commentary to drive discovery and deeper artist engagement.
Spotify Co-CEO Gustav Söderström added that the company is still in the “very early stages of what is possible” and would continue to have a “high bar” for investments as it focuses on better engineering, faster shipping, new products and new ways for users to engage.
“Our job remains the same: understand the technology early and deeply, and turn it into something people love, creating value for our stakeholders,” he said.
