In the first quarter of 2025, Spotify showed strong growth in revenue and added more premium subscribers than expected, even though its operating income fell short of its own forecast due to share price issues. The company shared its Q1 results on Tuesday, showing that its business is in good health.
For the quarter ending March 31, Spotify’s total revenue rose by 15% compared to last year, reaching €4.19 billion (around $4.41 billion), which matched the company’s expectations.
This growth came from increases in both subscriptions and advertising. Monthly Active Users (MAUs) grew by 10% year-over-year to 678 million, meeting the company’s target.
A notable highlight was the growth in premium subscribers. Spotify gained 5 million paid subscribers during the quarter, bringing the total to 268 million, a 12% increase from last year.
This was much higher than the company’s forecast of 2 million net additions and marked its best first-quarter subscriber gain since 2020. This growth came from strong performance in all regions and successful marketing campaigns.
Spotify also saw improved profitability. Its gross margin increased by about 400 basis points from last year to 31.6%, slightly above its guidance. The company attributed this to better efficiency in its music and podcast services and the rising popularity of audiobooks.
Spotify recorded an operating income of €509 million, up from €168 million last year, but it was below the projected €548 million. The shortfall was due to unexpected social charges of €76 million related to its share price rise, which the company had not anticipated. Free cash flow remained strong at €534 million for the quarter.
Despite the good operational results and strong subscriber growth, Spotify’s stock was volatile in early trading after the announcement. This may have been due to the operating income miss or higher earnings expectations from some analysts.
Looking ahead, Spotify expects to continue growing in the second quarter. The company forecasts it will reach 689 million MAUs and 273 million premium subscribers. Revenue is projected at €4.3 billion, with operating income aimed at €539 million.
Spotify Founder and CEO Daniel Ek said, “The underlying data at the moment is very healthy: engagement remains high, retention is strong. So yes, the short term may bring some noise, but we remain confident in the long-term story, and the direction we’re heading in feels clearer than ever.”