Spotify has warned of weaker profitability and slower premium subscriber growth in the second quarter of 2026, sending its shares lower in premarket trading and shifting investor attention away from its strong first-quarter performance.
The company expects operating income of €630 million for Q2, below analyst estimates of €684 million. It also forecast 299 million premium subscribers, falling short of the 302 million expected in the market.
Revenue guidance of €4.8 billion remains broadly in line with forecasts, while monthly active users are projected at 778 million, slightly above expectations.
Investors reacted quickly. Shares dropped about 6% after the outlook was released, as investors focused on slowing growth in paid subscriptions, particularly in Europe and North America, where recent price increases appear to be limiting further expansion.
In contrast, the first quarter showed stronger financial performance. Spotify reported revenue of €4.53 billion, up 8% year on year and in line with expectations. Operating income reached a record €715 million, supported by lower payroll-related costs. Gross margin rose to 33%, one of its highest levels to date.
User growth also held firm in Q1. Monthly active users climbed to 761 million, beating forecasts. Premium subscribers rose to 293 million, up 9% year on year, although slightly below market estimates.
Leadership is still under co-chief executives Gustav Söderström and Alex Norström following the transition earlier in the year, when Daniel Ek moved into the role of executive chairman.
Spotify is enhancing its artificial intelligence features to support engagement and retention. Tools such as AI DJ, AI Playlist, and Prompted Playlist have expanded across music and podcasts, while newer recommendation features aim to deepen personalisation.
Competition is intense, with Apple Music and Amazon Music both expanding similar AI-driven discovery tools, while streaming platforms more broadly are relying on recommendation systems to sustain user engagement.
