Spotify reaches 300 million paying subscribers and the share still falls

Spotify passed the mark of 300 million paying subscribers for the first time in the second quarter of 2026. Seven million were added in the quarter, one million more than the company itself had expected. Against the year before that is an increase of nine percent.

The share nevertheless gave way 1.68 percent to 478.17 dollars on 4 August. Before the open the fall had been around four to five percent. Since the start of the year the paper is about 16 to 18 percent down.

The reason lies in the outlook. For the third quarter Spotify expects 788 million monthly active users and operating profit of 670 million euros. Both figures came in below estimates.

The short version

• Spotify passed 300 million paying subscribers for the first time in the second quarter of 2026, adding seven million in the quarter.
• The share gave way 1.68 percent to 478.17 dollars on 4 August because the outlook stayed below estimates.
• The gross margin reached a high of 33.4 percent, and operating profit rose 61 percent to 655 million euros.

Record margin and a first jump in profit

The figures for the quarter itself were strong. Revenue rose 14 percent to 4.777 billion euros, and 15 percent adjusted for currency, and therefore landed within the company own guidance.

The gross margin reached a high of 33.4 percent and beat the target of 33.1 percent. Against the year before it rose by 193 basis points.

Operating profit reached 655 million euros and therefore came in above the target of 630 million. Against the year before that is a rise of 61 percent.

Net profit was 545 million euros. In the year earlier quarter there had still been a loss of 86 million euros.

Free cash flow reached 797 million euros. Over twelve months it adds up to 3.3 billion euros, and cash and investments to 9.4 billion euros.

Why the margin rises

One connection explains the margin development. The licensing costs for music are mostly calculated as a share of revenue and not as a fixed amount.

If Spotify raises its subscription prices, part of that additional revenue therefore flows straight into gross profit. That is exactly what has contributed to the widening margin in recent quarters.

Average revenue per paying user was 4.89 euros. Subscription revenue rose 15 percent to 4.331 billion euros and makes up 91 percent of total revenue.

Advertising remains the weak spot

The advertising supported area by contrast grew only one percent to 446 million euros. According to the company the number of impressions sold rose, though that was partly offset by weaker prices.

The number of monthly active users reached 777 million, up twelve percent, and therefore came in one million below the company target of 778 million. The group attributes that to product adjustments.

Of those, 494 million fell on advertising supported use, an increase of 14 percent.

Costs rise in the short term

As the reason for the cautious outlook management names higher spending on artificial intelligence and marketing as well as more moderate growth in mature markets. The group describes those cost increases as temporary.

Spotify is sticking to its targets for 2030. It aims for gross margins of 35 to 40 percent, operating margins above 20 percent and one billion subscribers.

For the third quarter five billion euros of revenue, 305 million paying subscribers and a gross margin of 32.9 percent are expected.

In the quarter the group launched two new offerings. A programme together with Live Nation gives particularly active subscribers earlier access to concert tickets. In addition users can have personal audio pieces generated.

Since the start of the year Spotify has bought back own shares for 662 million dollars, which corresponds to around 2.2 million shares and about one percent of the count.

Frequently asked questions

Why does the margin at Spotify rise

The licensing costs for music are mostly calculated as a share of revenue and not as a fixed amount. If Spotify raises its subscription prices, part of that additional revenue therefore flows straight into gross profit.

Why did the share fall despite record figures

The reason lies in the outlook. For the third quarter Spotify expects 788 million monthly active users and operating profit of 670 million euros. Both figures came in below estimates.

How is the advertising business developing

The advertising supported area grew only one percent to 446 million euros. According to the company the number of impressions sold rose, though that was partly offset by weaker prices.

This analysis is for information only and is not investment advice.