Spotify reported first quarter 2026 financial results on April 28 that came in at or ahead of its own guidance across all key metrics, delivering record quarterly operating profitability even as shares fell sharply in pre-market trading on a more conservative second quarter outlook than investors had anticipated. Revenue reached €4.533 billion, up 8 percent year over year and 14 percent on a constant currency basis, with gross margin finishing at a first quarter record of 33 percent, expanding 133 basis points year over year, primarily from Premium segment gains. Operating income reached €715 million with a 15.8 percent margin, and net income rose to €721 million, reflecting significantly improved profitability.
Monthly active users climbed 12 percent year over year to 761 million, slightly ahead of the company’s prior guidance of 759 million, while Premium subscribers grew 9 percent to 293 million, reflecting 3 million net additions in the quarter despite Spotify’s recent price increases in the United States. Premium revenue rose 10 percent to €4.15 billion, while ad-supported revenue declined 5 percent to €385 million. Premium subscriber growth was led by Latin America and Europe, with strong global promotional campaign intake also contributing. Europe accounted for 36 percent of Spotify’s total Premium subscriber base at the end of the first quarter. The ad-supported revenue decline and rising artificial intelligence compute and marketing costs were flagged as near-term pressures, with management indicating elevated operating expenditure would continue for one to two more quarters.
Co-Chief Executive Officer Alex Norström said the company surpassed 760 million monthly active users, delivered on subscriber growth targets, and saw healthy engagement from existing users, reactivations, and new users alike, expressing confidence in sustained user and subscriber growth, low churn, and continued progress on revenue and margin. Shares of Spotify fell 11.4 percent in pre-market trading following the results, despite the record profitability, as investors reacted to a second quarter subscriber guidance figure of 299 million that implied only 6 million net additions, below the prior year quarter’s performance. For the second quarter, Spotify projects total monthly active users will reach 778 million, revenue of €4.8 billion, gross margin of 33.1 percent, and operating income of €630 million. The pullback in share price reflects a broader market expectation that Spotify’s growth trajectory would remain steeper, but the underlying profitability improvement across gross margin, operating income, and free cash flow tells a story of a business that has made substantial progress on financial discipline even as user growth continues to outpace most of the streaming industry.
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