Spotify falls on second quarter earnings miss

Investing.com -- Spotify Technology SA (NYSE: SPOT) reported second-quarter results that fell short of analyst expectations, sending shares 6% lower in premarket trading.

Adjusted earnings per share came in at €2.61, missing the consensus estimate of €2.76. Revenue reached €4.78 billion, slightly below the analyst estimate of €4.79 billion, representing 14% growth YoY or 15% on a constant currency basis.

The streaming company’s premium subscribers reached 300 million during the quarter, adding 7 million net subscribers and exceeding its guidance of 6 million. Monthly active users grew 12% YoY to 777 million, with 16 million net additions, though this came in slightly below guidance of 17 million.

Gross margin reached a record high of 33.4%, up 193 basis points YoY and above the company’s guidance of 33.1%. Operating income totaled €655 million, exceeding guidance of €630 million, driven by gross margin strength and lower social charges. Free cash flow reached €797 million in the quarter, bringing trailing 12-month free cash flow to €3.3 billion.

"Overall, we view the business as well positioned to deliver improved growth and margins in 2026 as we reinvest to support our long-term potential," the company stated.

For the third quarter, Spotify issued revenue guidance of €5 billion, above the analyst consensus of €4.93 billion. However, the company’s operating income guidance of €670 million came in below the consensus estimate of €681.1 million.

Premium revenue grew 15% YoY to €4.33 billion, driven by 9% subscriber growth and premium average revenue per user of €4.89, up 7% YoY. Ad-supported revenue increased 1% YoY to €446 million, or 3% on a constant currency basis.

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