Spotify, the global music streaming service, has released its financial results for the first quarter of 2025, showing growth in its user base and financial performance. The company reported an increase in the number of users who pay for its premium service, which contributed to revenue growth and resulted in a record-high operating income.
Subscriber Growth
Spotify’s business relies on two types of users: premium subscribers, who pay a monthly fee for an ad-free experience with additional features, and free users, who access the service with advertisements.
In Q1 2025, the number of premium subscribers reached 268 million. This figure represents a 12 percent increase from the same quarter last year and an addition of 5 million subscribers from the previous quarter, which ended with 263 million.
Spotify had forecasted 265 million premium subscribers for Q1, meaning the actual number exceeded expectations by 3 million. The company noted that this growth came from successful promotional campaigns in regions such as Rest of World, Latin America, and Europe, which accounted for 14, 23, and 37 percent of the premium subscriber base, respectively.
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Total User Base
Spotify also tracks its total Monthly Active Users (MAUs), a measure that combines both paying and free users. In Q1 2025, total MAUs grew to 678 million, up 10 percent from the same period last year and an increase of 3 million from the 675 million recorded in Q4 2024. However, the number of free, ad-supported users decreased by 2 million, from 425 million in the previous quarter to 423 million.
This reduction in free users, alongside the growth in paying users, suggests that Spotify is converting some free users into Premium Subscribers. Growth in MAUs occurred across all regions, with Rest of World and Latin America contributing 34 percent and 22 percent of the total MAU base, respectively.
Financial Performance
Spotify’s total revenue for Q1 2025 was €4.190 billion. When adjusted for currency fluctuations, referred to as constant currency, this marks a 15 percent increase from the same quarter last year. The majority of this revenue, €3.771 billion, came from premium subscribers.
This growth resulted from the increase in subscriber numbers and a rise in the Average Revenue Per User (ARPU), which reached €4.73 per month, up 4 percent from last year. The company explained that this ARPU increase stemmed from price adjustments, though shifts in product and market mix partially offset the gains.
Revenue from ad-supported users amounted to €419 million, a 5 percent increase year-over-year at constant currency. This growth occurred despite the decrease in free users, indicating that Spotify is generating more revenue per ad-supported user. The company’s gross margin, which shows the percentage of revenue remaining after accounting for the cost of goods sold, was 31.6 percent.
Spotify reported an operating income of €509 million for the quarter, a measure of profitability from its core operations before interest and taxes. This figure set a record for the company, though it fell below the forecasted €548 million. Historically, Spotify has prioritised expanding its user base over immediate profitability, making this operating income a notable achievement.
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CEO Commentary
Spotify’s Founder and chief executive officer, Daniel Ek, stated, “The underlying data at the moment is very healthy: engagement remains high, retention is strong, and thanks to our freemium model, people have the flexibility to stay with us even when things feel more uncertain.”
He further noted, “So yes, the short term may bring some noise, but we remain confident in the long-term story, and the direction we’re heading in feels clearer than ever.”
Future Outlook
For Q2 2025, Spotify forecasts total MAUs to reach 689 million, an increase of about 11 million users from Q1. The company expects premium subscribers to grow to 273 million, adding approximately 5 million subscribers. Additionally, Spotify projects total revenue of €4.3 billion and an operating income of €539 million. These projections indicate confidence in continued growth, driven by the expansion of the paying user base and improvements in revenue generation.
