Spotify Lowers Profit Forecast, Shares Slide on Tax Impact

Swift Summary

• Spotify has forecasted lower-then-expected profit for Q3 due to higher taxes on employee salaries despite strong demand for premium plans.
• The company’s shares fell nearly 9% in early trading after the declaration, though they have risen 57% this year.
• Operating income is projected at €485 million ($561.05 million), below market expectations of €562 million.
• Premium subscribers increased by 12% to reach 276 million in Q2, exceeding estimates. Monthly active users (MAU) also grew by 18 million, surpassing forecasts with a total of 696 million MAUs.
• Second-quarter revenue rose by 10%, reaching €4.19 billion ($4.85 billion), but missed the market estimate of €4.26 billion due to unfavorable currency movements reducing growth by approximately 440 basis points.
• Spotify expects third-quarter revenue of €4.2 billion, falling short of the estimated €4.48 billion.
• The company expanded its share buyback program to $2 billion, approving an additional $1 billion for repurchases through April 2026 amid investor concerns over profitability and competition from Apple and Amazon.

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!Image for Spotify forecasts profit below estimates on higher taxes,shares sink
Source: Reuters

Indian Opinion Analysis

Spotify’s Q3 forecast reflects broader challenges facing global tech companies as they balance operational expenses against enterprising growth targets in highly competitive industries like streaming and podcasts. Factors such as rising employee-related tax costs highlight regional policy impacts that may complicate profitability, even amid steady subscription increases.

The expansion of its share repurchase program seems aimed at shoring up investor confidence amidst fluctuating revenues and mounting competition from industry giants like Apple and Amazon-companies with far stronger financial backbones than Spotify’s tax-laden quarters indicate.

For India specifically-a rapidly growing consumer base were streaming services are gaining widespread popularity-the report highlights analysis opportunities about cost optimization strategies relevant in similar high-tax regulatory environments while leveraging subscriber boosts across price-sensitive markets.

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