Spotify Grows Users, Faces Profitability and Ad Headwinds

Spotify reported strong first-quarter 2025 growth, with monthly active users up 10% year-over-year to 678 million and premium subscribers rising 12% to 268 million, both surpassing analyst expectations. Revenue climbed 15% to €4.2 billion, and Spotify posted a record operating income of €509 million, though this fell short of its internal forecast due to higher payroll taxes linked to share price gains. Despite these positive results, earnings per share missed Wall Street estimates and the stock price dropped 6-9% amid concerns over profitability and global trade tensions. CEO Daniel Ek cited high engagement, strong retention, and the freemium model as long-term strengths, but acknowledged volatility in the economic environment. Spotify projects continued growth in Q2, with premium subscribers expected to reach 273 million and monthly active users 689 million, both above market forecasts. However, the company cautioned that advertising revenue growth may slow due to economic uncertainty and changing marketer priorities.