Spotify reported first-quarter 2026 financial results on Monday, exceeding analyst expectations for both operating income and monthly active users, though the streaming giant's stock remains under pressure.
The company's monthly active users reached 761 million, according to multiple major media outlets. That figure surpassed Spotify's own projection of 759 million, which The Independent reported. Revenue climbed 14 percent from a year earlier, Bloomberg data showed. Operating income hit a record high, also reported by Bloomberg, comfortably beating the consensus estimate of €685.7 million compiled from major media surveys. In its earnings release, Spotify attributed part of the profit beat to lower personnel costs, although the exact amount saved was not specified.
Yet the positive tone was tempered by a confusing outlook for user growth. Dagens Industri, a Swedish business daily, wrote that Spotify expects 778 million monthly active users in the second quarter. Meanwhile, The Independent published a figure of 761 million, which exactly matches the first quarter's actual user count. This contradiction, arising from different media interpretations of the company's guidance, has not been clarified by Spotify itself. A swing of 17 million users carries meaningful consequences for growth expectations, potentially shifting revenue projections and advertising inventory calculations by tens of millions of euros. Many market observers suspect the UK newspaper inadvertently repeated the first-quarter number, but until the company resolves the discrepancy, the uncertainty will linger over the stock.
Since the global rollout of our more personalised 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.
Alex Norström, who stepped into the co-CEO role alongside Gustav Söderström in January, a move widely reported by major media, pointed to product improvements as the driver of user engagement. He emphasized that since the global rollout of a more personalized free experience, users in key markets like the US are listening and watching more days per month. This, he said, reinforces the company's confidence in sustained user and subscriber growth, low churn, and continued progress on revenue and margin. The leadership change, initially seen as a risk by some investors, has now been tested by a full quarter under the dual structure, and the strong performance lent credibility to the transition.
Earlier this year, Spotify raised prices in several key markets. The Independent detailed that the UK premium plan increased to £12.99 per month, the family plan to £21.99, and the US individual plan to $13 per month. These price hikes, coming after years of relatively stable pricing, are a strategic lever to boost average revenue per user. The full effect on subscriber churn and new sign-ups remains to be seen, as the first quarter captured only a partial impact. The second quarter will provide a clearer picture of how subscribers are reacting to the higher fees. While executives did not provide granular churn data, the overall user growth suggests the moves have not yet dented demand.
New York Stock Exchange data shows Spotify shares down nearly 15 percent year-to-date, sharply underperforming the S&P 500, which has gained close to 5 percent over the same period, according to market data. The reasons for this divergence are not fully explained. Possible factors include a rotation out of high-growth technology names amid macro uncertainty, ongoing concerns about future monetization, or the unresolved guidance confusion highlighted earlier. Despite the stock's underperformance, analysts remain overwhelmingly positive. A Bloomberg survey indicated that 82 percent of analysts covering Spotify have a buy recommendation on the stock, with none recommending selling. This disconnect between analyst optimism and market price suggests that near-term headwinds may be discounted, but it also raises questions about whether the stock can rebound if execution continues.
We’re well positioned because of our large, engaged user base, deep creator relationships, and years of investment in personalisation and infrastructure at scale.
Gustav Söderström, the other co-CEO, expressed confidence in Spotify's competitive position. He cited the company's large, engaged user base, deep creator relationships, and years of investment in personalization and infrastructure at scale. He added that there is significant room to grow across users, formats, and engagement, and to expand what Spotify is and can become over time.
For the second quarter, Spotify guided for revenue of €4.8 billion, according to major media reports. However, the company also indicated that operating income would decline sequentially from the record first-quarter level, without offering a detailed rationale. This projected dip, combined with the unclear reasons behind it, represents one of several unknowns that will dominate upcoming discussions with management. Another open question is the precise impact of the lower personnel costs on the record profit beat, as the company did not quantify the saving.
In a separate cultural milestone, The Independent reported that Taylor Swift was named the top artist on Spotify's 20th anniversary list, underscoring her enduring global appeal and the platform's role in highlighting top talent.
As the second quarter unfolds, investors will focus on whether Spotify can maintain its momentum. The new co-CEOs have delivered a record quarter, but a downbeat stock and muddled guidance underscore the challenges of balancing growth and profitability in the competitive streaming landscape. All eyes will be on the company's ability to clarify its user targets and demonstrate that the price hikes are accretive without sparking mass cancellations.