Spotify’s Q2 Earnings Forecast Falls Below Expectations

On April 28, Spotify announced its second-quarter earnings forecast, predicting results below analyst estimates. The company cited increased spending on marketing for new features as a key factor. Growth in major markets, specifically Europe and North America, has also slowed, resulting in an 11% drop in shares.

Co-CEO Gustav Soderstrom reported that Spotify is investing significantly in new features. This includes marketing efforts and the computing power necessary for artificial intelligence, rather than expanding its workforce. In recent years, Spotify has attempted to enhance profitability through price increases and AI-powered features to improve user engagement.

Spotify anticipates an operating income of 630 million euros for the second quarter. This figure is below the LSEG-compiled analysts’ average estimate of 684 million euros. It contrasts sharply with Spotify’s record operating income of 715 million euros in the first quarter, which surpassed estimates of 681.6 million euros.

The first-quarter growth was aided by lower payroll taxes, known as social charges, which are linked to the company’s share value. Spotify shares have declined around 15% this year after a 30% increase in 2025. CFO Christian Luiga indicated that the company plans to release many new features in the middle of the year.

These new features are expected to drive up operating expenses over the coming quarters. Spotify has already rolled out AI features, including voice interaction for its AI DJ and an AI Playlist that generates playlists using natural-language prompts. The company also expanded its Prompted Playlist feature to include podcasts.

Spotify’s monthly active users forecast of 778 million exceeded the estimated 773 million. However, its prediction of a 6 million increase in premium subscribers to 299 million fell short of the expected 302 million. Premium subscribers grew 9% to 293 million in the first quarter, while the total monthly active user count rose by 10 million to 761 million.

The company reported revenue growth of 8%, reaching 4.53 billion euros for the quarter ending March 31. Its revenue forecast of 4.8 billion euros for the current quarter aligns with analyst expectations.