Spotify Technology (SPOT) investor relations material

Executive summary

• Q1 2026 delivered strong results, with MAUs reaching 761 million and Premium Subscribers at 293 million, both growing in line with or exceeding targets.

• Achieved the second-highest gross margin ever at 33%, with operating income between €715 million and €780 million, reflecting disciplined execution and strong industry partnerships.

• Major product launches included a fitness hub with Peloton content and new AI-powered personalization features, supporting user retention and engagement.

• Continued investment in AI and product innovation is accelerating feature delivery and user value, with a focus on long-term growth.

• Net income attributable to owners was €721 million, up from €225 million in the prior year quarter.

Financial highlights

• Total revenue for Q1 2026 was €4.53 billion, up 8% year-over-year (14% on constant currency), with premium revenue rising 10% and ad-supported revenue declining 5%.

• Gross margin was 33%, expanding 133 basis points year-over-year and exceeding guidance by 20 basis points.

• Operating income ranged from €715 million to €780 million, with an operating margin of 15.8%.

• Free cash flow was €824 million, aided by timing factors expected to reverse in Q2.

• Cash and cash equivalents stood at €8.8 billion, with no debt aside from lease liabilities.

Outlook and guidance

• Q2 2026 guidance: MAUs of 778 million (+17 million), subscribers of 299 million (+6 million), and revenue of €4.8 billion (+15% year-over-year).

• Gross margin expected at 33.1% in Q2, up 160 basis points year-over-year.

• Operating income guidance for Q2 is €630 million, reflecting ongoing R&D and marketing investments.

• Full-year 2026 expected to show continued improvement in gross and operating margins, with free cash flow growth and a normalized tax rate by 2027.

• Currency headwinds expected to moderate to ~80 bps in Q2.