Finance
Spotify forecasts profit below estimate on high payroll taxes, shares sink
Published by Global Banking & Finance Review®
Posted on July 29, 2025
2 min readLast updated: January 22, 2026
Global Banking & Finance Review®
Company
Published by Global Banking & Finance Review®
Posted on July 29, 2025
2 min readLast updated: January 22, 2026
Spotify's profit forecast misses estimates due to rising payroll taxes, causing shares to drop. Revenue and subscriber growth remain strong.
By Jaspreet Singh
(Reuters) -Spotify forecast quarterly profit below estimate on Tuesday, as higher taxes related to employee salaries outweigh music streaming demand, sending its high-flying shares down 11%.
Investors are closely monitoring the Swedish company's profitability after price hikes and cost-cutting efforts in recent years helped it achieve its first annual profit for 2024.
Spotify has also been expanding its library of video content to attract subscribers, a bet that has helped shares more than double in value in the past 12 months. But the higher stock price has led to a jump in payroll taxes linked to employee compensation, hampering profit.
Such taxes, called social charges, totaled 116 million euros ($133.62 million) in the second quarter. That caused Spotify to post a 42-cent-per-share loss, compared with a 1.33-euro profit a year ago.
The company signaled the trend would continue in the third quarter, forecasting an operating income of 485 million euros. That is below analysts' estimate of 562 million euros, according to data compiled by LSEG.
Spotify's revenue forecast of 4.2 billion euros was also below the estimate of 4.48 billion euros, while the monthly active users (MAU) projection of 710 million came in line with the estimate. Its prediction for a 5 million increase in premium subscribers to 281 million was above a Visible Alpha estimate of 279 million.
The company began investing in video podcasts in 2020 after buying podcast networks Gimlet Media and Anchor FM. Last year, it signed a new multi-year deal with podcaster Joe Rogan.
"We have now added more than 400,000 video podcasts ... more people are consuming video on the platform," CEO Daniel Ek told Reuters.
Spotify's premium subscribers rose 12% to 276 million in the second quarter, beating a Visible Alpha estimate of 273 million. MAU additions of 18 million brought the total to 696 million.
Revenue rose 10% to 4.19 billion euros, but missed the estimate of 4.26 billion euros due to an unfavorable currency impact of about 440 basis points.
($1 = 0.8681 euros)
(Reporting by Jaspreet Singh in Bengaluru; Editing by Pooja Desai and Shilpi Majumdar)
Spotify forecasted a quarterly profit below estimates, projecting an operating income of 485 million euros, which is lower than analysts' expectations of 562 million euros.
Higher payroll taxes, referred to as social charges, totaled 116 million euros in the second quarter, leading to a loss of 42 cents per share compared to a profit of 1.33 euros a year ago.
Spotify's revenue forecast for the upcoming quarter is 4.2 billion euros, which is below the analysts' estimate of 4.48 billion euros.
Spotify reported a 12% increase in premium subscribers, reaching 276 million in the second quarter, surpassing the Visible Alpha estimate of 273 million.
Spotify began investing in video podcasts in 2020, acquiring podcast networks like Gimlet Media and Anchor FM, and has since added over 400,000 video podcasts to its platform.
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