The news: Spotify reported a mixed Q1, with strong revenue gains overshadowed by a lower-than-expected outlook and downward ad trends.

By the numbers:

• Revenues: +8% YoY to €4.53 billion ($5.11 billion); +14% on a constant currency basis
• Ad-supported revenues: -5% YoY to €385 million ($434.3 million); -25% QoQ
• Ad-supported MAUs: +14% YoY to 483 million; +1% QoQ
• Premium subscribers: +9% YoY to 293 million, in line with guidance

Spotify anticipates Q2 operating income of €630 million ($710.73 million), notably below analyst expectations of €684 million ($771.65 million), per Reuters. The company said ad-supported revenue was pressured in part by a January 1, 2026, reclassification of certain revenue-generating activities into the Premium segment; it also noted that declines were in part due to music costs and other engagement-related expenses.

Spotify’s stock was down as much as 12% before the bell on the back of its lackluster guidance.

Why it matters: Spotify is perhaps the biggest name in digital streaming audio, but soft guidance and slow advertising growth raise questions about the strength of its ad business.

• Spotify dominates in listeners across audio-first platforms, with 114.4 million US listeners anticipated this year, per our forecast—well above competitors like Amazon Music (55.3 million) and Pandora (40.2 million).