---
title: "Spotify: Solid Results, Big Tax Bill"
description: "Spotify reported strong Q1 2025 results with revenue of 4.2 billion euros, a 16% increase year-over-year, and premium subscribers rising to 268 million, up 12%. However, earnings per share missed expe"
type: "news"
locale: "en"
url: "https://longbridge.com/en/news/238080613.md"
published_at: "2025-04-29T13:46:20.000Z"
---

# Spotify: Solid Results, Big Tax Bill

> Spotify reported strong Q1 2025 results with revenue of 4.2 billion euros, a 16% increase year-over-year, and premium subscribers rising to 268 million, up 12%. However, earnings per share missed expectations at 1.07 euros due to higher employment taxes of 76 million euros linked to a 106% share price increase. Despite a 6% drop in share prices post-earnings, Spotify anticipates continued growth in users and premium subscribers, although it faces potential headwinds from consumer spending and currency volatility.

Here's our initial take on **Spotify**'s (SPOT -6.42%) fiscal 2025 first-quarter financial report.

## Key Metrics

Metric

Q1 2024

Q1 2025

Change

vs. Expectations

Revenue

3.6 billion euros

4.2 billion euros

16%

Met

Earnings per share

0.97 euros

1.07 euros

10%

Missed

Premium subscribers

239 million

268 million

12%

Beat

Free cash flow

207 million euros

534 million euros

158%

n/a

## Spotify Sees Growth Everywhere, Including Taxes

Spotify's 2024 momentum continued in the first three months of 2025, with the company reporting active monthly users up 10% to 678 million and premium subscribers up 12% to 268 million. It translated into solid 16% year-over-year revenue growth and 10% earnings growth for the quarter.

Alas, some of Spotify's success is taking a toll on results. Spotify's EPS result came in significantly below Wall Street expectations due to higher-than-expected costs. The culprit? About 76 million euros in employment taxes tied to the 106% increase in the company's share price over the past year.

Spotify said those so-called social charges were about 58 million euros above forecast.

Operating metrics for the company continue to look strong. Spotify's average revenue per user for its subscription businesses was up 4% to 4.73 euros, fueled by price increases. And ad-supported revenue was up 8%. Overall gross margin came in at 31.6%, up 400 basis points from a year ago.

The strong profitability helped Spotify more than double free cash flow in the quarter to 534 million euros.

## Immediate Market Reaction

The earnings miss appears to be weighing on investors in early morning trading. Share prices of Spotify were down 6% following the release of earnings but ahead of the open of regular trading on the New York Stock Exchange.

## What to Watch

Spotify turned a lot of heads in 2024 when it was able to use the benefits of its massive scale and pricing power to generate its first full year of profitability. The company said it was watching "headwinds," including a potential slowdown in consumer spending and volatile foreign currency exchange rates, but still sees continued growth in 2025.

The company expects total users to grow to 689 million in the current quarter, which is slightly below Wall Street expectations, but for premium subscribers to grow to 273 million, which would be slightly better than what analysts expected.

The bull case from here is that Spotify has a sticky product and is a relatively affordable "splurge" when times are tough. Spotify's quarter, despite the tax-related turbulence, provided no reason to worry that the bull case is in doubt.

## Helpful Resources

-   Full earnings report
-   Investor relations page

### Related Stocks

- [SPOT.US - Spotify](https://longbridge.com/en/quote/SPOT.US.md)
- [SLDB.US - Solid Biosciences](https://longbridge.com/en/quote/SLDB.US.md)

## Related News & Research

| Title | Description | URL |
|-------|-------------|-----|
| It’s About Time Spotify Raised Subscription Prices in the U.S. (Opinion) | Spotify plans to raise its U.S. subscription price by $1 to $12.99, potentially boosting annual revenue by $500 million. | [Link](https://longbridge.com/en/news/267389556.md) |
| Spotify’s Strategic Growth and Profitability: A Top Pick in Media and Entertainment | Benjamin Swinburne has rated Spotify as a Buy, citing its strong growth potential and strategic positioning. Key factors | [Link](https://longbridge.com/en/news/264414601.md) |
| IronBridge Private Wealth LLC Has $905,000 Holdings in Apple Inc. $AAPL | IronBridge Private Wealth LLC reduced its stake in Apple Inc. (NASDAQ:AAPL) by 77.3% in Q3, holding 3,555 shares valued  | [Link](https://longbridge.com/en/news/276436345.md) |
| Rocket Lab Corporation $RKLB Stock Holdings Increased by Vanguard Group Inc. | Vanguard Group Inc. increased its stake in Rocket Lab Corporation (NASDAQ:RKLB) by 5.4% in Q3, owning 41.8 million share | [Link](https://longbridge.com/en/news/276451972.md) |
| Denali Advisors LLC Lowers Stake in Alphabet Inc. $GOOG | Denali Advisors LLC reduced its stake in Alphabet Inc. (NASDAQ:GOOG) by 27.4% in Q3, now holding 76,983 shares valued at | [Link](https://longbridge.com/en/news/276432387.md) |

---

> **Disclaimer**: This article is for reference only and does not constitute any investment advice.
