Spotify (NYSE: SPOT) posted its Q2 2025 financials, with revenue jumping 10% YoY to €4.19 billion from €3.81 billion.
Gross profit also widened to €1.32 billion as margin improved 230 basis points to 31.5% from last year’s €1.11 billion. Operating expenses inched up 8% to €914 million from €846 million a year ago, allowing operating income to reach €406 million—53% higher than €266 million a year earlier, though 20% lower than the record set in Q1.
However, those gains were overwhelmed by factors leading to a net loss of €86 million (or €0.42 loss per share) replaced the prior year’s €274 million profit (or €1.37 per share). Management blamed heavier personnel, marketing and professional services spending plus €115 million in social charge accruals. On top of that, finance costs ballooned to €447 million, turning last year’s modest €4 million net finance gain into a €358 million drag, while the effective tax rate flipped to a €134 million expense from a €4 million benefit.
First half operating cash flow nearly doubled to €1.25 billion thanks to stronger interest income and a working capital release. Management redeployed €8.57 billion into short term securities, leaving investing cash flow €718 million in the red, but still raised ending cash to €5.16 billion.
On operations, monthly active users grew 11% to 696 million, and premium subscribers rose 12% to 276 million. Advertising supported revenue slipped 1% to €453 million despite ad-tier accounts now exceeding 60% of total users. CEO Daniel Ek called the shortfall “an execution challenge, not a problem with the strategy,” pointing to “promising signs” in programmatic ads.
However, investors seem to disagree as company shares fell 11% in a single-day drop, the worst since July 2023.
Looking ahead, management guides Q3 2025 revenue to just €4.2 billion, roughly flat sequentially and €270 million shy of forecasts. The company targets 710 million monthly users and 281 million premium subscribers, but offers no earnings outlook.
Spotify last traded at $636.21 on the NYSE.
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