Spotify Technology (NYSE:SPOT) reported its first-quarter 2026 financial results on Tuesday, April 28, delivering record-breaking profitability even as shares dipped in early trading due to a conservative second-quarter outlook.
The audio streaming giant posted revenue of €4.53 billion, an 8% increase year-over-year (14% on a constant currency basis), falling slightly short of the most aggressive Wall Street estimates but meeting the company's own guidance.
User growth remained a primary engine for the quarter, with Monthly Active Users (MAUs) climbing 12% year-over-year to 761 million, surpassing the company’s guidance of 759 million.
Premium Subscribers grew 9% to 293 million, in line with expectations.
Premium revenue rose 10% to €4.15 billion, bolstered by the full effect of recent price increases in the U.S. and other key markets.
The headline story for the quarter was Spotify’s dramatic expansion in margins.
Gross margin reached a Q1 record of 33%, driven by improved podcasting economics and a growing contribution from audiobooks.
Operating income hit an all-time quarterly high of €715 million—a 15.8% margin—well ahead of the guided €660 million.
This profitability surge was aided by continued cost discipline and a reduction in social charges following a decline in the stock price during the quarter.
Free cash flow for the quarter also hit a Q1 record of €824 million, bringing the trailing twelve-month total to €3.2 billion.
Despite the record results, the stock saw a 6.8% decline in pre-market trading as investors reacted to the company's Q2 2026 guidance.
Spotify projected Q2 operating income of €630 million, which trailed analyst estimates of €674 million.
For the second quarter, the company expects MAUs to reach 778 million and Premium Subscribers to grow to 299 million, with total revenue forecasted at €4.8 billion.