Spotify reported strong subscriber and monthly user growth on Tuesday (July 29), but a hit to its operating income linked to foreign exchange losses and taxes after its recent surging stock price caused investor concern. The streaming giant’s stock was down 9.7% at about 2:30 p.m. ET.

Here are some of the main takeaways from Spotify’s second quarter 2025 financial results, along with comments executives made on a conference call discussing earnings.

Comparisons to First Quarter & Future Forecasts Disappoint

Total revenue, gross profit and premium revenue in the second quarter were flat from the first quarter this year, despite being up by double-digit percentages when compared to the company’s second quarter performance a year ago. Some other metrics were actually down from the first quarter.

Operating income declined 20% from the prior quarter to 406 million euros ($476 million), missing the company’s forecast by 133 million euros ($156 million). Spotify CFO Christian Luiga said most of this was attributable to “social charges,” which were 98 million euros ($115 million) more than the company expected after Spotify’s recent share price appreciation. Additionally, over the first six months of the year, Spotify’s stock rose nearly 70%, hitting a high of $772.60 on June 27 — which triggered higher payroll taxes for Spotify on employees’ share-based compensation. Luiga also said lower-than-expected ad sales revenue and taxes contributed to the miss.

The weakening dollar resulted in a 104 million euro ($122 million) hit to total revenue. Spotify records its financials in euros, and Luiga said the company is expecting a 200 million euro ($234 million) headwind to total revenue in the coming quarter.

Executives emphasized that quarterly anomalies like these do not hurt the company’s long-term value to its customers or investors. However, Spotify told investors to expect total revenue in the third quarter to be roughly the same as it was in the second — 4.2 billion euros — and for average revenue per user (ARPU) to be the same in the third quarter of 2025 as it was in the third quarter of the prior year in constant currency.

Third quarter gross margin is forecast to fall slightly from the second quarter at 31.1%, as the company sees more variability as it invests in growth initiatives, Luiga said. Spotify still expects operating margin expansion over the full year 2025.

The company also announced a plan to buy back up to $2 billion of its own shares.

Advertising Growth Is Behind Schedule

Spotify CEO Daniel Ek said during his opening remarks on a conference call that he was “unhappy” with Spotify’s advertising business and that it was failing to meet expectations. Ad-supported revenue of 453 million euros ($531 million) for the quarter was down 1% from a year ago.

“We’ve simply been moving too slowly, and it’s taking longer than expected to see the improvements we initiated to take hold,” Ek said.

Notably, Spotify’s longtime vp/global head of advertising Lee Brown is leaving to become chief revenue officer at DoorDash starting in late August.

Spotify’s ad business grew 5% from a year ago if you strip out the effects of currency fluctuations, with automated or programmatic ads contributing the most. Ek said programmatic ads are expected to help the company achieve its ad business growth goals in 2026.

Expect Subscriber & Monthly Average User Growth to Continue

Executives celebrated another quarter of net gains in paying subscribers, equating the 267 million total Spotify subscribers to roughly 3% of the world’s population.

“It’s not implausible to imagine us reaching 10 or even 15% of the world’s population,” co-president/chief business officer Alex Norström said.

Norström says the company continues to find ways to recruit new subscribers in developed markets and emerging ones, and that the conversion rate from free to paid users “is healthy and just continues to tick up nicely.”

Spotify is expecting an increase of 14 million monthly average users in the third quarter from the prior quarter, bringing the total MAUs to 710 million, and an increase of 5 million subscribers in the third quarter, bringing the total number to 281 million.