Strong Q1 Performance
Spotify delivered first-quarter 2026 results that met or exceeded expectations across all key metrics. Premium subscribers grew to 293 million with a 9% year-over-year increase, while monthly active users climbed to 761 million, up 12% year-over-year. The company achieved total revenue of €4.5 billion, representing 14% year-over-year growth in constant currency. Gross margin improved to 33%, marking approximately 140 basis points of improvement year-over-year. Operating income reached €715 million.
Weak Q2 Guidance
Despite the strong Q1 results, Spotify forecasted second-quarter profit below analyst estimates. Multiple headlines indicate the company cut profit guidance for the upcoming quarter, citing slower growth in North America and Europe. This forward guidance disappointed investors and triggered the stock decline.
Market Reaction
Spotify shares slumped on April 28, 2026, following the earnings announcement. The stock decline occurred despite the company beating earnings expectations and hitting record subscriber numbers, demonstrating that investors focused more heavily on the weaker outlook for the second quarter than on the strong Q1 performance.
Business Momentum and Innovation
The company highlighted strong user engagement and continued innovation, including new features like Taste Profile, Prompted Playlists, SongDNA, and About the Song. Spotify reported that users in key markets like the US were listening and watching more days per month following the global rollout of its personalized free experience, and the company expressed confidence in sustained user and subscriber growth with low churn. 
Answer