Spotify Shares Slide 6.8% as Q2 Operating Income Guidance Misses by €44M
Spotify delivered Q1 adjusted EPS of €3.45 and revenue of €4.53 billion, surpassing estimates, while MAUs rose 12% to 761 million. However, Q2 operating income guidance of €630 million fell €44 million short of consensus, prompting a 6.8% share decline.
1. Strong Q1 Financial Performance
Spotify posted adjusted EPS of €3.45 beating the €2.95 estimate and generated €4.53 billion in revenue, up 8% YoY (14% constant currency). Monthly active users rose 12% to 761 million, premium subscribers increased 9% to 293 million, record gross margin hit 33.0%, operating income reached €715 million, and free cash flow was €824 million.
2. Q2 Operating Income Guidance Miss
For the second quarter, Spotify forecast operating income of €630 million, undercutting the €674.3 million consensus by €44.3 million. The company expects revenue of €4.8 billion and MAUs of 778 million, both slightly above forecasts, but the profit forecast shortfall outweighed these positives.
3. Market Reaction and Outlook
Shares fell 6.8% following the guidance shortfall as investors reassess margin expansion prospects. Despite strong Q1 results driven by lower social charges and robust premium growth, concerns over profit trajectory and cost pressures may weigh on valuation and sentiment going forward.