Spotify Hits 268M Paid Subscribers While Ad Revenue Drops 22%

Spotify just released its Q1 2025 financial report, sharing quarterly figures and insights on new verticals such as the Spotify Partner Program, automated ad solutions, and concert discovery.

Compared to the quarter ending in December, Q1 2025 was fairly flat, with total monthly active users rising by just 3 million, Premium Subscribers increasing by 5 million, and Ad-Supported MAUs falling by 2 million. Gross profit dipped by 3% quarter-over-quarter, while free cash flow fell by 39%. Despite the weak quarter-over-quarter growth, the numbers showed significant improvement compared to Q1 2024. Spotify reported being quite pleased with the performance, stating that nearly all KPIs were in line with expectations. The company noted that unfavorable currency movements contributed to the quarter-over-quarter dip. On the upside, a gross margin of 31.6% modestly exceeded guidance and reflected a 403 basis-point year-over-year expansion.

Daniel Ek shared a message stating:
“Our Q1 2025 earnings results are out. We hit record subscriber growth in Q1, we rolled out several new features, and most importantly, we’re moving faster than ever as we deliver the best experience for our users, artists, creators, and authors. Huge thanks to all Spotify teams around the world for making it happen.”

Premium Average Revenue Per User (ARPU) grew 4% year-over-year to €4.73, while Ad-Supported Revenue grew 8% year-over-year (or 5% in constant currency*). Spotify also reported that its automated sales channels were the largest contributors to overall advertising growth.

Daniel Ek also noted that the team is working on optimizing Spotify for TV screens, home speakers, and cars. Check out the complete Q1 2025 report here.

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