Spotify $SPOT on Tuesday forecast second-quarter operating income of €630 million. The fell short of the €684 million analysts had expected, according to Reuters. The guidance sent Spotify's stock down 12% in premarket trading.
Those Q2 concerns came despite a strong showing in the first quarter. Spotify reported record Q1 operating income of €715 million, with total revenue reaching €4.53 billion — a 14% increase on a constant-currency basis — and a gross margin of 33%, ranking as the second-best figure the company has ever posted. Monthly active users climbed 12% year over year to 761 million, and premium subscribers grew 9% to 293 million.
The Q2 profit miss reflects slowing growth in Spotify's core markets. Variety reported that Spotify's Q2 targets include €4.8 billion in total revenue, 778 million monthly active users, and 299 million premium subscribers — a figure that would represent the addition of 6 million paid accounts over the quarter.
One factor behind the Q1 profit strength, Reuters noted, was a reduction in payroll-related social charges — costs that move with the company's stock valuation. With Spotify shares down roughly 15% in 2026, those charges came in lower than usual, a tailwind unlikely to recur at the same magnitude heading into Q2.
Advertising revenue on the free tier fell 5% as reported, though stripping out currency effects revealed a 3% gain; Spotify attributed the underlying improvement to stronger music ad impressions and growth in podcast sponsorship deals. Premium revenue grew 10% as reported, or 15% on a constant-currency basis.
On the bottom line, Variety noted that Spotify's Q1 net income surged to €721 million — more than three times the €225 million recorded a year prior — boosted by €222 million in finance income and a €216 million tax benefit. Free cash flow climbed 54% to €824 million.
Alex Norström, co-CEO of Spotify, said in a statement: "We surpassed 760 million MAU, delivered on the subscriber growth we aimed to achieve, and saw healthy engagement from existing users, reactivations and new users alike. All that reinforces our confidence in sustained user and subscriber growth, low churn, and continued progress on revenue and margin."
The co-CEO structure took effect at the beginning of 2026, when Daniel Ek transitioned out of the CEO role to become executive chairman, according to Variety, with Norström and Söderström stepping into shared leadership.