Spotify reports subscriber growth but ad revenue declines in Q1 2026 results

The streaming company said it recorded 761 million monthly active users (MAUs) in Q1 2026, up 12% year on year, while premium subscribers rose 9% to 293 million. Growth was led by expanding penetration in Latin America and other international markets, which together now account for close to 40% of subscribers.

Despite this broadening user base, Spotify’s advertising business continued to weaken. Ad-supported revenue fell 5% year on year to €385 million (about $450 million), marking a 25% drop on a quarterly basis. The company attributed part of the reported shift to internal reclassification of certain revenue streams between its Premium and Ad-Supported segments.

Total revenue for the quarter stood at €4.53 billion, an increase of 8% compared with the same period last year. Premium subscriptions remained the dominant contributor, generating €4.15 billion, up 10% year on year.

Gross profit rose 13% to nearly €1.5 billion, while operating income increased 40% to €715 million. Net income was reported at €721 million.

Spotify said it expects continued growth in the second quarter, forecasting 778 million MAUs and 299 million subscribers, alongside projected revenue of €4.8 billion.

However, investor reaction to the results was negative. Spotify’s share price fell about 9% in early trading, later declining roughly 13% to around $428.

During the earnings call, co-chief executive Alex Norström said the company viewed current advertising challenges as temporary. He added that increasing user engagement would support longer-term monetisation opportunities, without providing further detail on short-term ad recovery.

Spotify also outlined continued investment in artificial intelligence, stating its ambition to integrate AI tools across its platform and develop what executives described as a more “multiplayer” user experience. The company said it is training proprietary models using its large-scale user data set.

Executives did not provide new updates on reported AI music creation tools ahead of the company’s Investor Day scheduled for 21 May.

Spotify also confirmed that its catalogue has expanded to approximately 250 million tracks, reflecting continued growth in user-generated and AI-assisted audio content across the platform.