Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Spotify added 5mn paying subscribers in the first three months of the year, even as chief executive Daniel Ek warned about the “short-term noise” around US President Donald Trump’s tariffs.
The music-streaming group reached 268mn paying subscribers in the quarter ending March 31, higher than Spotify’s guidance for 265mn. The performance was Spotify’s strongest first-quarter subscriber growth since 2020.
“The short term may bring some noise, but we remain confident in the long-term story,” said Ek, adding that Spotify’s free version would offer listeners “the flexibility to stay with us even when things feel more uncertain”.
But shares in the company fell almost 8 per cent in pre-market trade on Tuesday, as investors digested its forecasts for the year. Spotify said it expected monthly active users of 689mn in the second quarter, below the 693mn that analysts had forecast, according to Visible Alpha.
Spotify’s stock has more than doubled in the past year, as Wall Street rewarded the group for a cost-cutting push that resulted in its first-ever full-year of profit in 2024.
Music-streaming services are not affected by Trump’s tariffs, and analysts say that Spotify is relatively shielded from an economic downturn. The group made €225mn in net income on €4.2bn in revenue during the quarter.
In the US, Spotify costs $12 a month, compared with $10 a month when the streamer launched in the country more than a decade ago. Spotify was preparing to raise prices in dozens of countries across Europe and Latin America this summer, the Financial Times reported last week.
Recommended
TD Cowen analyst Doug Creutz said Spotify still offered good value for consumers relative to “other entertainment options” and would be “unlikely to see meaningful increases in [cancellations] even if the economy goes into recession”.
“People also have important emotional connections to music that become more important during times of stress,” Creutz added.
However, analysts expect that a recession would dent Spotify’s advertising revenue, which makes up about 10 per cent of the total. Spotify’s first-quarter advertising revenue climbed 8 per cent from a year ago, to €419mn.
