Spotify Revenues Up 8 Percent to €4.5 Billion

Spotify reported that it earned a net income of €721 million on revenues of €4.5 billion in the quarter ending March 31. Those figures represent gains of 320 percent and 8 percent year-over-year (YOY) respectively. But Spotify’s guidance for the current quarter fell below expectations, driving its stock price down 15 percent this morning. And I’m growing more concerned with the way Spotify fudges its financial reports.

“We surpassed 760 million monthly average users, delivered on the subscriber growth we aimed to achieve, and saw healthy engagement from existing users, reactivations and new users alike,” Spotify co-CEO Alex Norström said. “Since the global rollout of our more personalized free experience, users in key markets like the US are listening and watching more days per month. All that reinforces our confidence in sustained user and subscriber growth, low churn, and continued progress on revenue and margin.”

I’ve praised Spotify for its transparency in the past, as its always very clearly differentiated how paying and ad-supported customers contribute to its earnings. But over the past few years, the company has also delved ever-further into financial obfuscation by hiding its real-world profitability and promoting healthier-looking but essentially made-up numbers. And this quarter is particularly bad in that regard.

For example, Spotify reported that its revenues jumped “14 percent” to €4.5 billion, but they only rose 8 percent: That 14 percent number is “in constant currency,” an accounting method that ignores the real-world impact of currency exchange rate fluctuations and is not covered by the legally required Generally Accepted Accounting Principles (GAAP) or International Financial Reporting Standards (IFRS) that international companies must use. Many companies report both GAAP and non-GAAP results–Microsoft does, for example–because the latter typically makes it look better, but none are allowed to only report non-GAPP (or non-IFRS) numbers.

In this example, Spotify is applying a non-GAAP/IFRS growth figure to a GAAP/IFRS revenue figure. And that is basically fraud. Using non-GAAP numbers only, Spotify saw revenues jump 14 percent to €4.8 billion. In other words, by using the smaller of the revenue figures, but the larger of the growth figures, Spotify is trying to make its results look better and is hoping that nobody notices the sleight of hand. As bad, it isn’t providing a non-GAAP/IFRS figure for the year-ago quarter, making it more difficult to do the math.

This kind of chicanery is all over Spotify’s earning report. The executive summary is a single paragraph of text that contains three asterisks tied to this kind of obfuscation, for revenue growth (noted above), free cash flow, and LTM (last 12 months) cash flow.

And now we have a new kind of chicanery. I noted above that I’ve long pointed to Spotify’s differentiation of revenues from paid (premium) and ad-supported revenues as a nice bit of transparency. These are “hard numbers” that I feel all public companies should be required to provide for all products and services that they sell. But now, even those numbers come with an asterisk: Spotify is goosing its earnings report by moving “certain revenue-generating activities previously reported within the Ad-Supported segment to the Premium segment.” It has done this since January 2026, and it has retroactively changed its previous financial reports to conform to this change, knowing that few will both even looking.

With that major caveat out in the clear, Spotify said that revenues from premium/paid subscribers were up 10 percent in the quarter to €4.1 billion, while revenues from ad-supported customers declined 5 percent to €385 million. And … I can’t trust anything this company says anymore, so whatever.

Spotify allegedly added 10 million MAUs in the quarter, bringing its total customer base to 761 million. Premium subscribers grew 9 percent to 293 million, with 3 million net adds in the quarter.

And this may be the last time I ever discuss Spotify’s earnings. This company is not trustworthy.