Spotify has issued a warning of slower subscriber growth, leading to a reduced profit forecast for the third quarter and raising concerns about the streaming service’s ability to sustain its expansion pace. The Stockholm-based company anticipates operating profit of approximately €670 million for the July-September period, falling short of analyst expectations of €678 million, according to consensus data compiled by Visible Alpha.
In the second quarter, Spotify reported an operating profit of €655 million, surpassing estimates of €639 million, driven by robust revenue growth and lower payroll tax expenses. Revenue rose 14 percent year-over-year to €4.8 billion. The number of monthly active users increased 12 percent to 777 million, and premium subscribers grew 9 percent to 300 million.
Looking ahead, Spotify projects that monthly active users will reach 788 million by the end of September, slightly below the consensus estimate of 794 million. The expected increase in premium subscribers is about 5 million, bringing the total to 305 million, which aligns closely with analyst forecasts. Despite the dimmer growth outlook, Spotify’s shares experienced only a marginal decline, falling 0.1 percent to $485.79 in midday trading in New York.
To maintain its market position amid competition from platforms such as YouTube and Netflix, as well as emerging AI-driven music startups including Udio and Suno, Spotify has introduced new artificial intelligence-powered features. These include “Personal podcasts” and “Reserved by Spotify,” designed to enhance user engagement and differentiate its offerings in a crowded streaming landscape.
Co-chief executive Alex Norström emphasized the company’s scale and potential, stating that Spotify has reached a level of business health and growth opportunities unmatched by most firms in history. Founded in Stockholm in 2006 by Daniel Ek and Martin Lorentzon, Spotify launched publicly in 2008 and has since become the world’s leading music streaming service.
In addition to its user growth and product developments, Spotify announced a new partnership with Merlin, a London-based digital music licensing entity. This agreement supports Spotify’s forthcoming paid tool for fan-created covers and remixes, enabling artists signed under Merlin’s license agreements to participate and receive compensation through the platform.
The company’s recent results and outlook highlight both ongoing growth challenges and strategic efforts to innovate within a highly competitive digital music market.