Spotify Technology (SPOT) Q1 2025 earnings summary

Executive summary

• Q1 2025 delivered strong results, with revenue rising 15% year-over-year to €4.2 billion, driven by 12% growth in Premium Subscribers and 10% growth in MAUs, outperforming expectations.

• Engagement and retention remain high, with the freemium model and product innovation supporting flexibility and growth.

• Gross margin reached a record 31.6%, and operating income was €509 million, though impacted by €76 million in social charges.

• Free Cash Flow hit a Q1 record of €534 million, with cash and short-term investments at €8 billion.

• The business remains well-positioned for continued growth and margin improvement in 2025.

Financial highlights

• Total revenue reached €4.2 billion, up 15% year-over-year; Premium revenue grew 16% to €3,771 million, and Ad-Supported revenue increased 8% to €419 million.

• Gross margin was 31.6%, up 400 bps year-over-year, with Premium at 33.5% and Ad-Supported at 15.3%.

• Operating income reached €509 million (12.1% margin), and net income was €367 million, with EPS of €1.10 basic and €1.07 diluted.

• Free Cash Flow was €534 million, with cash and equivalents at €8 billion.

• Premium ARPU increased 4% year-over-year to €4.73, driven by price increases.

Outlook and guidance

• Q2 2025 guidance: 689 million MAU (+11 million), 273 million Premium Subscribers (+5 million), €4.3 billion revenue, 31.5% gross margin, €539 million operating income.

• Guidance assumes a 170 bps FX headwind to revenue growth year-over-year.

• Full-year 2025 margins expected to improve at a measured pace, with a seasonally strong Q4 anticipated.

• No increase in marketing spend relative to sales is planned for 2025.

• Social Charges for Q2 expected at €18 million, based on Q1 close share price.