Q2 FY2026
Filed Aug 4, 2026Spotify reported Q2 2026 Total Revenue of €4,777 million, Gross Margin of 33.4%, Operating Income of €655 million and Free Cash Flow of €797 million, while guiding Q3 2026 Total MAUs to 788 million and Total Premium Subscribers to 305 million.
Revenue grew 14% Y/Y, Premium Subscribers and Gross Margin exceeded guidance, Operating Income exceeded guidance, and Free Cash Flow reached €797 million. MAUs finished 1 million below guidance and Ad-Supported Revenue grew 1% Y/Y.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Total Monthly Active Users (MAUs)other | 777 million | 2% | 12% |
| Premium Subscribersother | 300 million | 2% | 9% |
| Ad-Supported MAUsother | 494 million | 2% | 14% |
| Total Revenueother | €4,777 million | 5% | 14% |
| Revenue excluding foreign exchange effectnon-GAAP | €4,807 million | – | 15% |
| Gross Profitother | €1,596 million | 7% | 21% |
| Gross profit excluding foreign exchange effectnon-GAAP | €1,602 million | – | 21% |
| Gross Marginother | 33.4% | – | up 193 bps Y/Y |
| Total Operating Expensesother | €941 million | – | 3% |
| Operating expense excluding foreign exchange effectnon-GAAP | €955 million | – | 4% |
| Research and development expenseother | €403 million | – | (3)% |
| Sales and marketing expenseother | €390 million | – | 7% |
| General and administrative expenseother | €148 million | – | 10% |
| Operating Incomeother | €655 million | -8% | 61% |
| Operating income excluding foreign exchange effectnon-GAAP | €647 million | – | 59% |
| Operating Marginother | 13.7% | – | – |
| Finance incomeother | €86 million | – | – |
| Finance costsother | €(21) million | – | – |
| Finance income/(costs) - netother | €65 million | – | – |
| Income before taxother | €720 million | – | – |
| Income tax expenseother | €175 million | – | – |
| Net income/(loss) attributable to owners of the parentother | €545 million | – | – |
| Basic earnings/(loss) per share attributable to owners of the parentother | 2.65 | – | – |
| Diluted earnings/(loss) per share attributable to owners of the parentother | 2.61 | – | – |
| Premium Average Revenue per User (ARPU)other | €4.89 | – | 7% |
| Premium Gross Marginother | 34.9% | – | up 174 bps Y/Y |
| Ad-Supported Gross Marginother | 19.1% | – | up 179 bps Y/Y |
| Net Cash Flows From Operating Activitiesother | €816 million | -2% | 15% |
| Capital expendituresother | €21 million | – | increased €11 million Y/Y |
| Free Cash Flownon-GAAP | €797 million | -3% | 14% |
| Last Twelve Months Free Cash Flownon-GAAP | €3,261 million | – | – |
| Social Charges on share-based compensationother | €1 million | – | – |
| Full-time employees globallyother | 7,302 | – | – |
Segments
| Segment | Revenue | q/q | y/y |
|---|---|---|---|
| PremiumGrowth reflected subscriber and ARPU gains. Excluding the impact of FX, ARPU growth was driven by price increase benefits, partially offset by product/market mix. | €4,331 million | 4% | 15% |
| Ad-SupportedOn a constant currency basis, music advertising performance reflected growth in impressions sold, partially offset by softness in pricing. Podcasting growth was led by sponsorship gains within the Owned & Licensed portfolio. | €446 million | 16% | 1% |
Q3 2026 outlook
- Revenue€5.0 billion
- Gross margin32.9%
- NoteTotal MAUs: 788 million
- NoteImplies the addition of approximately 11 million net new MAUs in the quarter
- NoteTotal Premium Subscribers: 305 million
- NoteImplies the addition of approximately 5 million net new subscribers in the quarter
- NoteOperating Income: €670 million
- NoteAssumes ~200 bps tailwind to growth Y/Y (vs. ~70 bps headwind in Q1) due to foreign exchange rate movements
- NoteOperating Income incorporates €9 million in Social Charges based on a Q2 close share price of $459.13
Capital returns
- Repurchases of ordinary shares were €232 million in Q2 2026.
- We have repurchased $662 million in shares year-to-date through August 3rd, representing a 30% increase over 2025 levels.
- In aggregate, we have bought back nearly 2.2 million shares since we resumed repurchase activity in 2025, or approximately 1% of shares outstanding.
What drove it
- MAUs grew 12% Y/Y, with Y/Y and Q/Q growth across all regions.
- Premium Subscribers grew 9% Y/Y, with Y/Y and Q/Q growth across all regions and strong global promotional campaign intake.
- Premium Revenue grew 15% Y/Y, or 16% Y/Y constant currency, driven by subscriber and ARPU gains.
- Gross Margin improvement reflected Premium revenue growth outpacing music costs net of marketplace programs, audiobooks costs and video podcast costs.
- Ad-Supported Gross Margin benefited from favorable podcast and tax impacts that more than offset music costs and Other Costs of Revenue.
- Operating Expenses reflected temporary investments in marketing and cloud/AI spend, excluding Social Charges.
- Free Cash Flow was aided by higher Net Income adjusted for non-cash items, partially offset by movements in net working capital.
Concerns
- MAUs were 1 million below guidance, with 16 million net additions versus guidance for 17 million.
- Ad-Supported Revenue grew 1% Y/Y, or 3% Y/Y constant currency, as music advertising impressions sold growth was partially offset by softness in pricing.
- Operating Income declined from €715 million in Q1 2026 to €655 million in Q2 2026.
- Operating Expenses included temporary investments in marketing and cloud/AI spend.
- Social Charges are tied to the value of share-based compensation awards and can fluctuate with Spotify's share price.
- Q3 Total Revenue guidance assumes ~200 bps tailwind to growth Y/Y due to foreign exchange rate movements.
What to watch
- Q3 MAU performance against guidance for 788 million and approximately 11 million net new MAUs.
- Q3 Premium Subscriber performance against guidance for 305 million and approximately 5 million net new subscribers.
- Whether Total Revenue reaches Q3 guidance of €5.0 billion.
- Whether Gross Margin holds near the Q3 guidance of 32.9% after Q2 reached 33.4%.
- Whether Operating Income reaches Q3 guidance of €670 million, including €9 million in Social Charges.
- Advertising pricing trends, music advertising impressions sold, podcast sponsorship gains, and automated sales channels.
- The impact of Audiobooks+ add-on tiers, Family and Student plans, Personal Podcasts, and the Reserved concert-ticket offering.
Balance sheet and cash flow
- Cash and cash equivalents were €5,938 million at June 30, 2026.
- Short term investments were €3,450 million at June 30, 2026.
- Restricted cash and other non-current assets were €56 million at June 30, 2026.
- Cash & Cash Equivalents, Restricted Cash & Short Term Investments were €9.4 billion.
- Exchangeable Notes were — at June 30, 2026.
- Lease liabilities were €404 million in non-current liabilities and € not separately reported in current liabilities at June 30, 2026.
- Total assets were €13,748 million and total liabilities were €5,363 million at June 30, 2026.
- Net cash flows from operating activities were €816 million, net cash flows from investing activities were €62 million, and net cash flows used in financing activities were €218 million.
- Net increase in cash and cash equivalents was €660 million.
Analysis
Spotify delivered broad user, revenue, and profit growth in Q2 2026. Total MAUs rose 12% Y/Y to 777 million and Premium Subscribers rose 9% Y/Y to 300 million, with Y/Y and Q/Q growth across all regions. MAU net additions of 16 million were slightly below guidance for 17 million, while Subscriber net additions of 7 million exceeded guidance for 6 million.
Total Revenue increased 14% Y/Y to €4,777 million, or 15% Y/Y excluding foreign exchange effects. Premium Revenue increased 15% Y/Y to €4,331 million, driven by subscriber and ARPU gains. Premium ARPU was €4.89, up 7% Y/Y, with price increase benefits partly offset by product and market mix. Ad-Supported Revenue grew 1% Y/Y to €446 million, as higher music advertising impressions sold were partly offset by pricing softness, while podcasting growth was led by sponsorship gains.
Profitability expanded materially from the prior-year period. Gross Profit grew 21% Y/Y to €1,596 million and Gross Margin reached 33.4%, up 193 bps Y/Y and above the 33.1% guidance. Premium Gross Margin was 34.9%, up 174 bps Y/Y, while Ad-Supported Gross Margin was 19.1%, up 179 bps Y/Y. Operating Income was €655 million, up 61% Y/Y and above guidance of €630 million, although below €715 million in Q1 2026.
Operating Expenses increased 3% Y/Y to €941 million. The company cited temporary investment in marketing and cloud/AI spend, excluding Social Charges. Social Charges on share-based compensation were €1 million, €9 million below forecast due to share price movement during the quarter. The company stated that prior-year Operating Expenses included €115 million in Social Charges, underscoring the effect this item can have on expense and operating-income trends.
Cash generation and liquidity remained strong. Net Cash Flows From Operating Activities were €816 million and Free Cash Flow was €797 million, a record high Q2 according to the company. Last Twelve Months Free Cash Flow reached €3,261 million. Spotify reported €9.4 billion in cash and cash equivalents, restricted cash and short term investments, and repurchased $662 million in shares year-to-date through August 3rd. For Q3 2026, guidance calls for 788 million MAUs, 305 million Premium Subscribers, €5.0 billion of Total Revenue, 32.9% Gross Margin, and €670 million of Operating Income.
Not in the filing
stated, not guessed- Prior-release outlook was not provided; therefore, no vs_prior_guidance comparisons are included.
- Q3 2026 operating expenses guidance was not reported.
- Q3 2026 tax rate guidance was not reported.
- A Q2 2026 dividend amount was not reported.
- Current portion of lease liabilities was not separately reported.
- Prior-year and prior-quarter figures for Premium ARPU, Premium Gross Margin, and Ad-Supported Gross Margin were not reported on their own line items.
- GAAP and non-GAAP terminology is not applicable as reported; Spotify presents its financial statements under IFRS and identifies Free Cash Flow and constant-currency measures as non-IFRS.
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.