Spotify Technology Q2 Earnings Call Highlights

Spotify delivered strong second-quarter growth: Constant-currency revenue rose 15% year over year to EUR 4.8 billion, gross margin reached a record 33.4%, operating income exceeded guidance at EUR 655 million, and free cash flow increased 14% to EUR 797 million. Premium subscribers surpassed 300 million after Spotify added 7 million during the quarter, while monthly active users reached 777 million. The company forecast 305 million subscribers, EUR 5 billion in revenue and EUR 670 million in operating income for the third quarter. Spotify is prioritizing monetization and product expansion: It is refining free-service offerings in emerging markets, scaling automated advertising and its proprietary ad stack, and investing in AI features, audiobooks, ticketing and artist-approved remix tools to drive engagement and long-term average revenue per user.

Spotify Technology NYSE: SPOT reported second-quarter results marked by accelerating revenue growth, record gross margin and subscriber growth that pushed its Premium base above 300 million for the first time. Co-CEO Alex Norström said the company’s revenue rose 15% year over year on a constant-currency basis, accelerating from 14% growth in the first quarter. Gross margin reached a record 33.4%, while free cash flow continued to strengthen. Spotify added 7 million net subscribers during the quarter and ended the period with 300 million subscribers, exceeding its guidance by 1 million.

“More people are choosing Spotify, they’re engaging more deeply, and they’re converting,” Norström said, adding that active days among global subscribers increased during the quarter.

Total revenue was EUR 4.8 billion, up 15% year over year on a constant-currency basis. Premium revenue increased about 16%, driven by 9% subscriber growth and 7.4% year-over-year growth in average revenue per user. Ad-supported revenue rose 3%, consistent with the first quarter. Operating income totaled EUR 655 million, above guidance of EUR 630 million, for an operating margin of 13.7%. Free cash flow was EUR 797 million, up 14% year over year. Gross-margin performance exceeded Spotify’s guidance by 30 basis points. Luiga said the result reflected quarterly timing shifts related to growth investments and a small one-time benefit from the cancellation of Canada’s digital services tax, which allowed Spotify to reverse an accrual from prior years.

For the third quarter, Spotify forecast 788 million MAUs, representing net additions of 11 million, and 305 million subscribers, or 5 million net additions. The company expects third-quarter revenue of approximately EUR 5 billion, representing 14% growth, gross margin of 32.9% and operating income of EUR 670 million. Luiga said Spotify continues to expect advertising revenue growth to “inflect towards double-digit growth” in the second half of 2026. The company also expects both gross margin and operating margin to improve on a full-year basis, along with meaningful growth in free cash flow.