Spotify Disappoints with Earnings Report; Shares Plunge Over 11%
“Our focus has always been — and will continue to be — on lifetime value creation rather than quarterly optimization.”
Quick overview
- Spotify shares fell over 11% after reporting weaker-than-expected quarterly earnings.
- The company posted second-quarter revenue of €4.19 billion, below analysts' forecasts, and an adjusted loss of €0.42 per share.
- Currency fluctuations and rising costs negatively impacted results, leading to disappointing forward guidance.
- Despite short-term challenges, CEO Daniel Ek remains confident in long-term growth, with user base metrics exceeding expectations.
Spotify shares tumbled more than 11% on Thursday, hitting their lowest level since May, after the music and podcast streaming giant posted weaker-than-expected quarterly earnings.
The company reported second-quarter revenue of €4.19 billion, slightly below analysts’ forecast of €4.27 billion, though up from €3.81 billion a year earlier. However, the disappointment came on the bottom line: Spotify posted an adjusted loss of €0.42 per share, widely missing expectations of a €1.97 profit and down from €1.33 in the same period last year.
Currency pressure and rising costs weigh on results
“Significant currency fluctuations during the quarter negatively impacted reported revenue by €104 million relative to our forecast,” Spotify noted in its earnings release.
Operating income also came in below expectations, dragged down by higher payroll-related expenses, increased social charges, and a less favorable revenue mix. Forward guidance also disappointed investors, reflecting ongoing pressure from share-linked compensation expenses.
Despite the short-term weakness, CEO Daniel Ek reaffirmed his confidence in the company’s long-term growth path, stating that 2025 remains on track to be an “exceptional year.”
User base keeps growing above expectations
Ek highlighted that recent subscriber growth reflects strategic moves made several quarters ago, noting that such initiatives often take time to show measurable results.
Spotify expects to reach 710 million monthly active users (MAUs) in the third quarter, above analysts’ forecast of 707 million. In Q2, MAUs rose 11% year-over-year to 696 million, beating estimates of 689 million.
Premium subscribers grew 12% to 276 million, while ad-supported users rose 10% to 433 million — both metrics also coming in above market expectations.
“Our focus has always been — and will continue to be — on lifetime value creation rather than quarterly optimization,” Ek told investors.
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