Spotify [SPOT] stock was down 13.4% in mid-morning trading Tuesday, following the release of Q1 2026 earnings and Q2 forecasts.
The streamer reported increased revenue and 293 million paid subscribers, a rise of 3 million in Q1 2026. Total monthly active users (MAUs) grew 10 million to 761 million.
But while Spotify exceeded Q1 earnings per share expectations, investors reacted to a weak Q2 guidance.
The company predicted operating income of $736 million and growth of 6 million paid subscribers for the second quarter. Both are below analyst forecasts and less than previous year growth.
AI : "Existing artists are left out"
During the earnings call Spotify executives emphasized how AI is driving innovation at the streamer including more content, training its own "large personalization model," and new integrations with Claude and ChatGPT.
But the streamer admitted that not all artists are benefiting from AI.
"Existing artists are left out of the AI explosion because of complex copyright issues," Gustav Söderström, Co-CEO said during the call with investors. "We are determined to solve that problem... That may be the most interesting part for music."
Q1 2026 Earnings Year on Year Results
- Premium Subscribers grew 9% Y/Y to 293 million
- Monthly Active Users (MAUs) climbed 12% Y/Y to 761 million
- Total Revenue increased 14% Y/Y constant currency to $5.27 billion
- Gross Margin improved by 140 basis points Y/Y to 33%
- Operating Income reached $836.55 million
"We surpassed 760 million MAU, delivered on the subscriber growth we aimed to achieve, and saw healthy engagement from existing users, reactivations and new users alike," said Spotify co-CEO Alex Norström. “Since the global rollout of our more personalized free experience, users in key markets like the US are listening and watching more days per month. All that reinforces our confidence in sustained user and subscriber growth, low churn, and continued progress on revenue and margin.”
