Spotify Technology 2025 Q1 Earnings Misses Targets as Net Income Rises 14.2%

Spotify Technology (SPOT), ranking 106th by market capitalization, reported its fiscal 2025 Q1 earnings on April 29th, 2025. The company reported results in line with previous guidance but fell short of analyst expectations for operating income. Despite the miss, Spotify showed strong year-over-year revenue growth and improved profitability metrics. The company’s guidance for Q2 hints at potential challenges, with currency headwinds anticipated to impact revenue figures. Analysts might reassess their forecasts following the mixed results.

Revenue

Spotify Technology's total revenue in 2025 Q1 rose by 15.2% to $4.19 billion compared to 2024 Q1. The Premium segment generated $3.77 billion, showcasing its dominant contribution, while the Ad-Supported segment added $419 million, culminating in the overall revenue figure of $4.19 billion.

Earnings/Net Income

Spotify Technology's EPS increased by 11.1% to $1.10 in 2025 Q1 from $0.99 in 2024 Q1. The company achieved net income growth of 14.2%, reaching $225 million, a record high for fiscal Q1 net income in nine years. EPS performance was robust, reflecting effective cost management and revenue growth.

Price Action

The stock price of Spotify Technology has climbed 3.39% during the latest trading day, has edged down 2.28% during the most recent full trading week, and has edged down 0.57% month-to-date.

Post-Earnings Price Action Review

The earnings report metrics from Spotify Technology (SPOT) have positively influenced the stock's short-to-medium-term performance. Historical analysis indicates that the stock tends to perform well in the immediate three days following earnings releases, boasting a win rate of 47.62%. The trend improves over ten days, with a win rate of 61.90%. Over a 30-day period, the maximum observed return reached 11.08%, signaling potential for significant price appreciation in the weeks post-earnings. These trends suggest that investors might experience favorable outcomes, particularly in the immediate aftermath of earnings announcements.

CEO Commentary

Daniel Ek, Co-Founder and Chief Executive Officer, expressed satisfaction with Spotify's performance, highlighting strong subscriber growth as a standout in Q1 2025. He acknowledged macroeconomic uncertainties but affirmed Spotify's resilience, stating, "the business is solid, our model holds up." Ek emphasized the importance of focusing on solving real problems for users and creators, reiterating the company's commitment to innovation and execution in 2025. He stated, "we came into this year with a clear commitment to accelerate our pace of innovation," and emphasized that the long-term value is built by consistently solving meaningful problems.

Guidance

The company projects 689 million monthly active users (MAUs) and 273 million subscribers for Q2 2025, representing increases of 11 million and 5 million, respectively. Spotify anticipates total revenue of EUR 4.3 billion for the quarter, noting a potential headwind of EUR 100 million due to currency movements. Gross margin is expected to be 31.5%, with operating income forecasted at EUR 539 million. For the full year, the company expects continued improvement in margins, albeit at a more measured pace compared to 2024.

Additional News

In recent developments, Spotify Technology S.A. announced changes to its board of directors, electing Ted Sarandos as a member earlier this month. Additionally, the company has expanded its Partner Program to nine new markets, enhancing its global reach and advertising capabilities. Spotify has also introduced new advertising technologies, aiming to bolster its ad-supported revenue streams. Meanwhile, Daniel Ek, the Founder and CEO, has notified of his intention to sell stock, reflecting strategic financial maneuvers amid ongoing market dynamics. These changes mark significant strategic shifts, emphasizing Spotify's focus on strengthening its market position while navigating the evolving media landscape.