Spotify Technology 2025 Q2 Earnings Misses Targets as Net Income Falls 131.4%

Spotify Technology (SPOT), ranking 110th by market capitalization, reported its fiscal 2025 Q2 earnings on July 29th, 2025. Spotify's Q2 earnings report revealed a significant miss on expectations, with revenue of $4.19 billion falling short of analyst estimates. The company also issued guidance that missed forecasts, projecting revenue of EUR 4.2 billion for Q3. Despite these setbacks, Spotify continues to experience robust subscriber growth, with over 276 million premium subscribers by the end of Q2 2025, marking a 12% increase from the previous year. The firm remains optimistic about its long-term growth prospects.

Revenue

Earnings/Net Income
Spotify Technology swung to a loss of $0.42 per share in 2025 Q2 from a profit of $1.37 per share in 2024 Q2 (130.7% negative change). Meanwhile, the company reported a net loss of $-86 million in 2025 Q2, reflecting a 131.4% deterioration from the net income of $274 million achieved in 2024 Q2. Remarkably, in 2025 Q2, the company set a new record high for fiscal Q2 net income, the highest in 9 years. The significant decline in EPS indicates challenging financial performance for the quarter.

Price Action

Post-Earnings Price Action Review
The strategy of purchasing Spotify Technology (SPOT) shares upon quarterly earnings releases and holding for 30 days delivered mixed results over the past three years. Despite some fluctuations, the overall performance yielded positive returns, culminating in a value of $447.38 on December 31, 2025, an 11.55% increase from the initial price. The strategy proved profitable long-term, but not without its challenges. For instance, stock volatility led to notable drawdowns, such as a decline from $266.43 to $313.84, highlighting the importance of risk management. Additionally, tax implications of holding the stock for 30 days should be considered, as they can significantly impact overall returns. In summary, while the strategy delivered strong returns, investors should carefully assess their risk tolerance and tax situations before adopting it.

CEO Commentary
Daniel G. Ek, Founder, CEO & Chairman, highlighted strong user growth with over 100 million subscribers in Europe and a 30% increase in net additions compared to the prior year. He acknowledged challenges in the Ads business, stating, "We've simply been moving too slowly" but expressed confidence in future improvements. Ek emphasized Spotify's commitment to creating lifetime value, noting that many initiatives driving current growth were established years ago. He remains optimistic about reaching the goal of 1 billion subscribers, affirming, "I feel very good about our business" and the ongoing focus on innovation to enhance value for users and creators.

Guidance
Looking ahead, Spotify expects to reach 710 million Monthly Active Users (MAU) and 281 million subscribers in Q3 2025. Total revenue is forecasted at approximately EUR 4.2 billion, reflecting a headwind of about EUR 200 million due to unfavorable currency movements. The gross margin is projected to be 31.1%, with an operating income anticipated at EUR 485 million. The guidance indicates a focus on strategic investments that will support long-term growth while managing short-term performance pressures.

Additional News
Spotify Technology recently expanded its share repurchase program by $1 billion, reflecting confidence in its growth trajectory. Additionally, the company experienced a notable executive change, as its head of advertising was poached by DoorDash to serve as their chief revenue officer. This development comes amidst Spotify's efforts to bolster its advertising business. Furthermore, Spotify introduced a new feature for its AI DJ, enhancing user engagement with the service. The platform also expanded its audiobooks feature to four new countries, resulting in a 35% increase in listening hours across the U.S., U.K., and Australia. Despite current challenges, Spotify remains committed to innovation and expanding its service offerings.