What is the main topic?

The article discusses Spotify's profit forecast falling short of estimates due to payroll taxes, impacting its stock price.

How did Spotify's shares react?

Spotify's shares dropped 6% after the profit forecast missed estimates.

What contributed to Spotify's subscriber growth?

Subscriber growth was driven by video content and AI-powered services.

Editorial & Advertiser disclosure

Global Banking & Finance Review® is an online platform offering news, analysis, and opinion on the latest trends, developments, and innovations in the banking and finance industry worldwide. The platform covers a diverse range of topics, including banking, insurance, investment, wealth management, fintech, and regulatory issues. The website publishes news, press releases, opinion and advertorials on various financial organizations, products and services which are commissioned from various Companies, Organizations, PR agencies, Bloggers etc. These commissioned articles are commercial in nature. This is not to be considered as financial advice and should be considered only for information purposes. It does not reflect the views or opinion of our website and is not to be considered an endorsement or a recommendation. We cannot guarantee the accuracy or applicability of any information provided with respect to your individual or personal circumstances. Please seek Professional advice from a qualified professional before making any financial decisions. We link to various third-party websites, affiliate sales networks, and to our advertising partners websites. When you view or click on certain links available on our articles, our partners may compensate us for displaying the content to you or make a purchase or fill a form. This will not incur any additional charges to you. To make things simpler for you to identity or distinguish advertised or sponsored articles or links, you may consider all articles or links hosted on our site as a commercial article placement. We will not be responsible for any loss you may suffer as a result of any omission or inaccuracy on the website.

Home > Finance > Spotify's high payroll taxes hurt profit, shares slide

Finance

Spotify's high payroll taxes hurt profit, shares slide

Published by Global Banking & Finance Review®

Posted on April 29, 2025

2 min read

Last updated: January 24, 2026

Spotify's high payroll taxes hurt profit, shares slide - Finance news and analysis from Global Banking & Finance Review

Spotify's Profit Forecast Misses Estimates, Shares Drop

By Jaspreet Singh

(Reuters) - Spotify forecast second-quarter profit below market estimates on Tuesday due to employee salary-related taxes, taking the shine off its strong subscriber growth and sending the shares of the Swedish music-streaming giant down 6% before the bell.

The company's profitability is closely watched by investors looking for signs that it can bolster margins after years of prioritizing user growth.

While cost-cutting initiatives and price increases have aided profit in the recent quarters, its latest earnings took a hit from taxes tied to higher salaries and benefits that jumped sharply due to a rise in the company's stock price.

Spotify took 76 million euros ($86.47 million) in charges in the first quarter, offsetting lower marketing costs and weighing on its operating profit of 509 million euros, which was below estimates of 518.2 million euros, according to data compiled by LSEG.

Its second-quarter profit forecast of 539 million euros includes 18 million euros in payroll taxes, and was below estimates of 557.5 million euros.

Still, strong subscriber growth showed that efforts to draw users with more video content and AI-powered services, including playlists generated with a simple written prompt, were working.

Premium subscribers rose 12% to 268 million in the first quarter, beating Visible Alpha estimates of 265.3 million. The company had 678 million monthly active users, above estimates of 671.9 million.

CEO Daniel Ek told Reuters the company was focused on "adding various higher price point tiers" for those who want all the benefits.

He said a large share of new subscribers came from Latin America and the Asia-Pacific, regions he expects will power Spotify's long-term growth.

It expects monthly active users to rise to 689 million in the second quarter, compared with LSEG-compiled estimates of 684.9 million. Premium subscribers are expected to increase to 273 million, above Visible Alpha estimates of 271.5 million.

First-quarter revenue rose 15% to 4.19 billion euros, slightly below LSEG-compiled estimates of 4.20 billion euros. Spotify forecast second-quarter revenue of 4.3 billion euros, in line with estimates.

Spotify's shares have risen about 34% so far this year.

($1 = 0.8790 euros)

(Reporting by Jaspreet Singh in Bengaluru; Editing by Shounak Dasgupta and Arun Koyyur)

Spotify's high payroll taxes hurt profit, shares slide

Quick Summary

Spotify's Profit Forecast Misses Estimates, Shares Drop

Key Takeaways

Frequently Asked Questions about Spotify's high payroll taxes hurt profit, shares slide