Key facts
- Spotify forecasts Q3 operating income of €670 million, below analyst estimates.
- Q2 operating income was €655 million, beating estimates.
- Q2 revenue rose 14% to €4.78 billion, slightly below estimates.
- Q3 revenue is forecast to be €5 billion, slightly above estimates.
- Forecast Q3 monthly active users are 788 million, below estimates.
- Forecast Q3 premium subscriber increase is 5 million, in line with estimates.
Spotify forecasts third-quarter profit below Wall Street estimates, citing slowing user growth in its major markets of Europe and North America. This outlook caused the company's shares to drop around 5% in premarket trading. The company anticipates that increased marketing and development expenses, driven by AI investments, will negatively impact its current quarter's profit. Spotify projects lower-than-expected monthly active users for the third quarter due to product changes in emerging markets. For the third quarter, Spotify expects operating income of €670 million ($770.97 million), falling short of analysts' average estimates of €677.8 million. In the second quarter, the company's operating income was €655 million, surpassing estimates of €639.2 million, boosted by strong revenue growth and reduced payroll taxes. Spotify's quarterly revenue increased by 14% to €4.78 billion, slightly missing LSEG-compiled estimates of €4.80 billion. However, the revenue forecast for the third quarter of €5 billion was slightly above estimates of €4.93 billion. The company's forecast for monthly active users in the third quarter was 788 million, below Visible Alpha's estimates of 793.6 million. The outlook for a 5 million increase in premium subscribers, reaching 305 million, was largely in line with expectations. The company has introduced AI features like "Personal Podcasts" and new offerings such as "Reserved" to attract users and compete with rivals including YouTube, Netflix, and AI music startups like Udio and Suno. Spotify's shares have declined approximately 16% year-to-date.