Spotify has posted record quarterly results, surpassing 300 million Premium subscribers for the first time and reporting revenue of €4.8bn, up 14% year on year, as the streaming giant signalled that AI will drive the next phase of its growth.
The company added seven million Premium subscribers during the second quarter to reach 300 million, while monthly active users rose 12% to 777 million.
Operating income hit €655m and gross margin climbed to a record 33.4%, underscoring Spotify’s increasingly profitable business model. Despite this, the company’s share price fell over concerns about profitability.
For creators, producers and publishers, arguably the most intriguing story lay beyond the numbers. Having spent the past two years investing heavily in video podcasts, Spotify’s latest earnings place AI firmly at the centre of its product roadmap.
Among the launches are Personal Podcasts, which use AI to generate bespoke podcast episodes based on an individual’s interests, and Studio by Spotify Labs, a desktop app that creates personalised audio experiences using listeners’ habits across music, podcasts and audiobooks. The company has also expanded its premium audiobook offering and added more than 650 AI-narrated magazine articles from publishers including Rolling Stone, Variety and Wired.
The emphasis marks a subtle but significant shift. While Spotify has previously highlighted video podcasts as a major growth area, this quarter’s announcements barely mention video. The only major reference to video came in the context of music videos around song releases. Instead, executives repeatedly described AI as the technology that will underpin discovery, engagement and monetisation.
Co-president and chief product and technology officer Gustav Söderström said the company was delivering on the AI-focused vision outlined at its Investor Day through “better engineering, faster shipping, new products and new ways for users to engage.”
Spotify also revealed that automated buying now accounts for almost 40% of ad-supported revenue, up from just over 30% in the previous quarter, while the number of active advertisers has grown 60% year on year.
The AI strategy also appears to be evolving. Rather than presenting artificial intelligence simply as a recommendation engine, Spotify is increasingly positioning it as a premium consumer product. AI-generated podcasts, conversational search, remix tools and personalised listening experiences are all designed to increase engagement and encourage users to pay for higher-value subscription tiers.
That could prove significant for creators as the platform uses AI to make music, podcasts and audiobooks more personal, interactive and commercially valuable.
The key takeaway from the session is that the platform is building systems and products that target superfans. Examples include Reserved ticketing, which gives the biggest fans access to tickets. The company’s leadership also talked about building a system that allows superfans to “run ahead” of average consumption – paying more for a product if they want to consume it more heavily. They cited the example of users who want to consume more audiobooks than the standard subscription allocation.
