Spotify Q2 2026 Earnings: 300 Million Premium Subscribers and a Record 33.4% Gross Margin Meet a €670M Q3 Guide

On August 4, 2026, Spotify reported second-quarter revenue of €4,777 million, up 14% year-over-year, and said it had reached 300 million Premium subscribers. Gross margin was 33.4%, which the company calls an all-time record, and operating income rose 61% to €655 million. Net income was €545 million, against a loss of €86 million a year earlier — a swing of €631 million on an operating improvement of €249 million. The difference is a liability that no longer exists: the Exchangeable Notes that cost €421 million in the second quarter of 2025 matured in March. For the third quarter the company guides to €5.0 billion of revenue and €670 million of operating income.

The Headline Numbers​

Spotify Technology S.A.'s fiscal year is the calendar year; Q2 2026 is the three months ended June 30, 2026. The company reports under IFRS in euros, and nothing here is converted. Every figure below is from the Form 6-K interim financial statements and the Q2 2026 shareholder update cited in Sources, and the ledger period was rebuilt from the same Form 6-K.

Revenue grew 14% and cost of revenue 11%, so gross profit grew 21%. That three-point gap between revenue and its direct cost is the whole gross-margin story, and it is covered below.

Operating expenses grew 3%, to €941 million from €914 million, but the comparison flatters the quarter. The shareholder update says the prior-year period included €115 million of social charges — payroll taxes tied to the value of share-based compensation, which move with the share price — against €1 million this quarter. Leaving out currency and social charges, the company puts operating expense growth at 19%, "primarily driven by an increase in marketing alongside cloud and AI spend." Operating income of €655 million is real; a part of its 61% growth rate is a share-price effect in last year's base.

Below operating income, finance costs fell from €447 million to €21 million. That one line turns a €48 million pre-tax profit into a €720 million one.

Revenue Deep Dive​

Spotify reports two segments, and the Form 6-K gives revenue and cost of revenue for each. Effective January 1, 2026 the company moved certain revenue-generating activities from Ad-Supported to Premium and reclassified the prior-year period, so both columns below are on the new basis.

Premium is nine-tenths of revenue and all of the growth. Revenue of €4,331 million grew 15%, which the update decomposes into 9% subscriber growth and Premium average revenue per user of €4.89, up 7%. On pricing the release is specific: excluding currency, "ARPU growth was driven by price increase benefits, partially offset by product/market mix." Price is doing almost as much work as volume. The demand language is equally direct — subscriber growth reflected "Y/Y and Q/Q growth across all regions" and "strong global promotional campaign intake," and an in-app anniversary feature helped "drive Spotify's biggest single day of subscriber intake ever." Net additions were 7 million against guidance of 6 million.

The ledger line that should confirm subscriber strength is deferred revenue, which is cash collected for service not yet delivered. It stood at €778 million at June 30, 2026, up 9.4% from €711 million six months earlier.

Ad-Supported revenue grew 1%, or 3% in constant currency, on 14% more ad-supported users. The update's explanation is that music advertising "was driven by growth in impressions sold, partially offset by softness in pricing." Pricing power in subscriptions and price softness in advertising are in the same release. Ad-Supported gross profit was €85 million on €446 million of revenue.

Geographically, the Form 6-K attributes €1,734 million of revenue to the United States, 36% of the total and up 9%, and €3,039 million to other countries, up 17%.

MAUs of 777 million were 1 million below the company's guidance; subscribers were 1 million above. The update contains no language about supply or capacity limits and none about an industry cycle, which is unsurprising for a streaming service. The themes it does contain are demand, pricing and new products, and the only one the numbers do not yet support is advertising.

The Margin Story​

Gross margin sat at 25% to 27% for three years and then moved 4.5 points in one, from 25.6% in FY2023 to 30.1% in FY2024. It has added another 3.3 points since. In the quarter the update attributes the improvement to Premium, where gains were "driven by Revenue growth outpacing music costs net of marketplace programs, audiobooks costs and video podcast costs," and to Ad-Supported, on "favorable podcast and tax impacts." Premium segment gross margin was 34.9%, up from 33.1%; Ad-Supported was 19.1%, up from 17.3%.

Operating margin moved further than gross margin, from −5.6% in FY2022 to 12.8% in FY2025 — 18 points, of which gross margin supplied 7. The rest came from operating expenses. They were 30.6% of revenue in FY2022 and 19.2% in FY2025. Research and development peaked at €1,725 million in FY2023 and was €1,393 million in FY2025 on revenue 30% higher. Sales and marketing was €1,572 million in FY2022 and €1,426 million in FY2025.

This quarter's 19.7% is slightly above the FY2025 level, and the company describes the marketing and cloud increases as "temporary investments." The guidance does not yet show them reversing: third-quarter gross margin is guided to 32.9%, half a point below this quarter.

The One Big Question: how much of the swing in net income is the business?​

A year ago Spotify earned €406 million from operations and reported a net loss. This quarter it earned €655 million from operations and reported net income of €545 million. Note 4 of the Form 6-K itemizes everything in between.

One row explains it. In 2021 a Spotify subsidiary issued US$1,500 million of 0% Exchangeable Senior Notes due 2026, and the company chose to carry them at fair value through profit and loss. Every change in their fair value therefore ran through finance income or finance costs, apart from the portion due to the company's own credit risk. The annual filings show the effect: fair value movements on the notes cost €98 million in FY2023, €239 million in FY2024 and €123 million in FY2025, and €421 million in the second quarter of 2025 alone.

The notes matured on March 15, 2026 and were settled in cash for €1,304 million. They are no longer on the statement of financial position, and the row is empty this quarter. The tax line shows the same effect: the Form 6-K puts the effective tax rate at 24.3% this quarter against 278.7% a year ago, when losses on the notes were not deductible.

So the answer has two parts. Of the €631 million improvement in net income, €249 million is operating income, and most of the remainder is the absence of a non-cash mark on a liability that has been repaid. Net income is now a cleaner measure of the business than it has been at any point in this ledger. It is not yet a fully clean one: foreign exchange gains and losses still sit in finance income and costs, and the Form 6-K says that a new IFRS presentation standard the company is evaluating would move certain of them into operating income.

Tracking a €4.8B quarter in plain text​

Double-entry forces every euro to reconcile, which is why the Beancount ledger is the audit. The income-statement transaction below is the quarter as filed in the Form 6-K — negative income, positive expenses, and the check that proves they sum to zero.

; Revenue: 4777 | Gross profit: 1596 | Operating income: 655 | Finance income: 86 | Finance costs: 21 | Net income attributable to owners of the parent: 545
; Finance income less finance costs nets to 65 of income, posted line by line on Income:OtherNet.
; Check: -4777 + 3181 + 403 + 390 + 148 - 46 - 2 - 29 - 9 + 8 + 13 + 175 + 545 = 0 ✓
 
2026-06-30 * "Spotify Technology S.A." "FY2026Q2 Income Statement"
  Income:Revenue                           -4777 MEUR  ; revenue: Premium 4,331 + Ad-Supported 446
  Expenses:CostOfRevenue                    3181 MEUR  ; cost of revenue: Premium 2,820 + Ad-Supported 361
  Expenses:ResearchAndDevelopment            403 MEUR  ; research and development
  Expenses:SellingGeneralAdministrative      390 MEUR  ; sales and marketing
  Expenses:SellingGeneralAdministrative      148 MEUR  ; general and administrative
  Income:OtherNet                            -46 MEUR  ; finance income: interest income
  Income:OtherNet                             -2 MEUR  ; finance income: interest income on finance lease receivables
  Income:OtherNet                            -29 MEUR  ; finance income: dividend income from investments held at period-end
  Income:OtherNet                             -9 MEUR  ; finance income: other finance income
  Income:OtherNet                              8 MEUR  ; finance costs: interest expense on lease liabilities
  Income:OtherNet                             13 MEUR  ; finance costs: foreign exchange losses
  Expenses:IncomeTax                         175 MEUR  ; income tax expense
  Equity:Adjustments                         545 MEUR  ; net income offset

That block is not an illustration; it is the period that was validated with bea check and pushed to open_ledger/spotify, with every line traceable to the interim condensed consolidated statement of operations and Note 4. The unit is MEUR, millions of euros as filed. Three modeling choices are deliberate. Sales and marketing and general and administrative are two labeled postings on one account, because the filing reports them as two captions. Every finance income and finance cost line from the note is its own posting on Income:OtherNet, so a fair-value movement can never hide inside a net figure — in the FY2024 file the same pattern shows a €239 million debit labeled as the Exchangeable Notes. And revenue is one posting, with the Premium and Ad-Supported split in its comment.

The balance sheet tells the rest. Cash and cash equivalents of €5,938 million and short term investments of €3,450 million are 68% of €13,748 million in total assets. Between December 31, 2025 and June 30, 2026 the company settled the Exchangeable Notes for €1,304 million in cash and repurchased €547 million of its own shares, and cash and cash equivalents still rose by €680 million, because operations generated €1,652 million in the half. Treasury shares went from €701 million to €1,248 million.

The one balance-sheet number that tells a story the income statement does not is Assets:NonCurrent:LongTermInvestments. It fell from €2,181 million to €1,118 million in six months. Those investments are carried at fair value through other comprehensive income, so the decline never touched net income: the statement of comprehensive income records a €847 million loss on them, net of tax, for the half. That loss and the buyback are why total equity rose only €56 million in a half that earned €1,266 million.

The Multi-Year Arc​

Each annual row is that year's Form 20-F as originally filed; each later filing repeats the prior year's statements unchanged.

Revenue grew every year — 21%, 13%, 18%, 10% — from €9.7 billion to €17.2 billion. Gross profit more than doubled over the same four years, from €2,591 million to €5,496 million, because the margin widened as the base grew.

The operating column changes sign twice. FY2021 was a small profit, FY2022 and FY2023 were losses of €659 million and €446 million as research and development and sales and marketing grew faster than revenue, and FY2024 was a €1,365 million profit on lower spending in both. Net income in FY2025 exceeds operating income, which is unusual, and the reason is in the tax line: income tax expense was €12 million on €2,224 million of pre-tax income, in a year when deferred tax assets on the statement of financial position rose from €186 million to €662 million.

Total assets grew 80% between FY2023 and FY2025 and then fell in 2026. That fall is the repayment of the notes, the buyback and the decline in long term investments, not operations.

The Verdict: Bull vs. Bear​

Bull Case

• Gross margin is at a record 33.4%, up 7.8 points from FY2023, with both segments improving year-over-year.
• Premium revenue grew 15% on 9% more subscribers and 7% higher ARPU, and the release attributes the ARPU gain to price increases.
• Operating income grew 61% to €655 million, and third-quarter guidance of €670 million on €5.0 billion of revenue implies growth of about 15% and 17%.
• The Exchangeable Notes are repaid, removing a finance cost that reached €421 million in a single quarter, and the release counts €9.4 billion of cash and cash equivalents, restricted cash and short term investments.

Bear Case

• Ad-Supported revenue grew 1% on 14% more ad-supported users, with the release citing softness in pricing.
• Excluding currency and social charges, operating expenses grew 19% — faster than revenue — and the reported 3% depends on a €115 million share-price-driven charge in last year's base.
• Third-quarter gross margin is guided to 32.9%, below this quarter's 33.4%.
• Long term investments lost almost half their carrying value in six months, and MAUs came in 1 million below guidance.

Our Take: This is the first quarter in which Spotify's net income can be read without an adjustment for the Exchangeable Notes, and what it shows is a business earning a 13.7% operating margin on revenue growing 14%. The margin expansion since FY2023 is real and is visible in every line of the ledger. The number to watch next quarter is operating expenses as a share of revenue: at 19.7% they are above the FY2025 level, and the company has called the increase temporary.

Correction (2026-10-06): an earlier version of this analysis stated Q2 2026 revenue of €4,200 million and net income of €294 million, a record gross margin of 30.1%, cost of revenue, research and development and SG&A that were fixed percentages of revenue rather than figures from the filing, an invented two-segment split, an unsourced peer comparison and a consensus estimate with no source. Those figures were wrong. Every figure above has been re-read from the Form 6-K interim financial statements and the Q2 2026 shareholder update, and the open_ledger/spotify ledger was rebuilt for FY2021 through Q2 2026 from the Form 20-F and Form 6-K filings in the same change.