Spotify stock slides on Q2 earnings loss, weaker forecast after record rally
Spotify (SPOT) stock slipped around 8% shortly after the opening bell on Tuesday after the audio giant posted a second quarter loss, missed revenue expectations, and issued softer guidance for revenue and operating income in the current quarter.
The results follow a remarkable 120% rally over the past year as the stock rebounded from 2022 lows, fueled by a sweeping business overhaul that included price hikes, layoffs, leadership changes, and a retreat from costly podcast exclusivity deals. Investor enthusiasm for AI and advertising has also played a key role in fueling the recent surge.
The stock hit an all-time high of $738.45 earlier this month but was trading closer to $650 shortly following the results.
Read more: Live coverage of corporate earnings
Spotify reported Q2 revenue of €4.19 billion ($4.86 billion), missing analyst expectations of €4.27 billion, though up from €3.81 billion a year earlier. The company posted an adjusted loss of €0.42 ($0.49) per share, missing forecasts for a profit of €1.97 and down from earnings of €1.33 in the same quarter last year.
"Outsized currency movements during the quarter impacted reported revenue by €104 million vs. guidance," Spotify said in its earnings release.
Operating income also missed expectations, weighed down by social charges, increased payroll expenses, and an unfavorable revenue mix. Guidance for the current quarter came in below Wall Street estimates, reflecting continued pressure from social charges linked to the company’s share price.
On the earnings call, CEO Daniel Ek acknowledged the near-term weakness but reaffirmed his confidence in Spotify’s long-term trajectory, saying he still expects 2025 to be a "standout year." He attributed recent user and subscriber growth to long-term initiatives launched quarters — or even years — ago, and emphasized that results aren’t always immediate or within the company’s control.
“Our approach has always been and will continue to be the focus on creating lifetime value rather than optimizing for quarter-to-quarter performance,” Ek told investors.
Strong user growth, margin pressure
Spotify guided to third quarter monthly active users (MAUs) of 710 million, ahead of the 707 million analysts expected. 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 increased 10% to 433 million — both topping forecasts.
Despite the strong user growth, Ek acknowledged challenges in the company’s ads business amid rising competition.
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