Streaming giant Spotify exceeded expectations in Q1 2026, reporting 761 million monthly active users and 293 million paid subscribers. These figures surpassed company guidance, indicating that recent price increases in key markets have not deterred user engagement.
Monthly active users rose 12% year-on-year, with 10 million net additions in the quarter, above the expected 8 million. Paid subscribers increased by 9% compared to last year. The quarter added 3 million new paid subscribers, in line with expectations. Most new users came from the rest of the world and North America, while Latin America and Europe had the most new subscribers.
Total revenue reached €4.5 billion, up 8% year on year. When adjusted to remove the impact of unfavourable exchange rates, revenue grew by 14%. Unfavourable exchange rates reduced the reported growth by approximately 6%.
Premium revenue, which makes up most of Spotify’s income, increased by 10% year-on-year to €4.1 billion. In contrast, ad-supported revenue decreased by 5% compared to the previous year, but increased by 3% when adjusted for constant currency.
Co-CEO Alex Norström attributed the performance to improving personalisation and stronger engagement from both new and returning users.
“Since the global rollout of our more personalised free experience, users in key markets like the US are listening and watching more days per month,” he said. “All that reinforces our confidence in sustained user and subscriber growth, low churn, and continued progress on revenue and margin.”
Record margins and profitability across the board
The company’s financial performance was strong, showing both increased growth and improved profit margins. In the first quarter, the gross margin reached a record 33%, which is 1.33 percentage points higher than the same period last year. This improvement was mainly due to the Premium segment performing better than expected, offsetting music licensing costs.
Operating income also reached a record high of €715 million, exceeding the company’s forecast of €660 million. This overachievement was partially due to lower-than-expected social charges (payroll taxes related to stock compensation), which were €49 million below projections because of stock price fluctuations during the quarter.
In the first quarter, Spotify’s free cash flow hit a record €824 million, the highest for any first quarter. Over the last year, Spotify produced €3.2 billion in free cash flow, showing a big change from past losses to steady and increasing profits.
Read also: Nigerian artists earned over ₦60 billion from Spotify alone in 2025
At the end of the first quarter, the company had €8.8 billion in cash and short-term investments. They also bought back €306 million of their own shares during this time.
New Spotify features and what comes next
In addition to its financial performance, Spotify announced several new features aimed at increasing engagement. SongDNA, a beta feature for Premium users worldwide, allows exploration of the creators, producers, collaborators, and samples behind any song.
Prompted Playlists, enabling users to request specific music and now podcasts with their own descriptions, became available in the US and Canada. Taste Profile, a beta feature launched in New Zealand that lets users directly influence Spotify’s understanding of their preferences, will be released in more countries soon. Spotify also introduced Audiobook Charts in the US and UK, providing weekly genre-based rankings of popular titles.
Spotify predicts that in the second quarter of 2026, it will have 778 million monthly active users and 299 million subscribers. The company expects total revenue of €4.8 billion and a gross margin of 33.1%.
The operating income is forecast to be €630 million, below the Q1 record due to planned marketing spending and rising AI and cloud infrastructure costs as investment in growth continues.
Technext Newsletter
Get the best of Africa’s daily tech to your inbox – first thing every morning.
Join the community now!
