After undertaking several aggressive cost-cutting and revenue boosting initiatives in 2024, Spotify swung back to a net loss in Q2 2025, even with reported double-digit growth in users and subscriptions – a sizeable setback in the streamer’s push for profitability.
The Swedish company added 8 million paid subscribers during the quarter to reach 276 million, a 12% year-over-year increase, and grew total monthly active users (MAUs) by 11% to 696 million.
Total revenue for the quarter increased 10% year-over-year to €4.2 billion, while gross margin improved to 31.5%, up from 29.2% in Q2 2024. Both figures came in below internal guidance. Spotify reported a net loss of €86 million for the quarter, reversing a net profit of €274 million a year earlier. Operating expenses rose 8% over the prior year, driven by personnel, marketing, and professional services costs.
Finance costs also weighed heavily on results. Spotify recorded €358 million in net finance costs in Q2 2025, compared to €4 million in finance income during the same quarter in 2024.
Despite the shortfall, Co-Founder and CEO Daniel Ek noted first-half momentum. Subscriber net additions rose more than 30% over the first half of 2024, and the second quarter marked the platform’s second-highest Q2 on record for MAU growth.
Ek said, “By constantly evolving, we create more and more value for the almost 700 million people using our platform. This value not only benefits users but it’s attracting more people to streaming and as a result, it’s also boosted the industries of music, podcasts, and audiobooks.”
Some within these industries would likely object to that statement, as Spotify faces backlash on numerous fronts.
The most prominent controversy is Spotify’s new practice of including audiobook offerings in its subscriptions, allowing the company to reclassify its service as a “bundled subscription,” lowering the mechanical royalty rates paid to songwriters. This reportedly costs music publishers between $150 million and $230 million in lost royalties.
Music publishers and songwriter groups like the National Music Publishers Association and Nashville Songwriters Association International have accused Spotify of acting in bad faith. A federal judge recently sided with Spotify, dismissing a lawsuit from the Mechanical Licensing Collective and ruling the company’s bundling strategy is legal under current regulations, for now settling this particular dispute.
However, US senators are pressing the FTC to investigate these bundling tactics, keeping the issue in the spotlight.
In addition, a growing list of artists are pulling their music from Spotify in public protest of CEO Daniel Ek’s investment fund, Prima Materia, which has funneled hundreds of millions of euros into Helsing, a defense company developing AI-powered military software.
Looking ahead, Spotify projects 710 million MAUs and 281 million paid subscribers in Q3, with expected revenue of €4.2 billion and operating income of €485 million.
