Spotify (SPOT) Q2 FY26 earnings call: guidance and Q&A

What products are most exciting in the near term and where will Spotify get the most traction over the next 3-5 years?

Gustav Söderström highlighted the underlying system built for differentiated monetization. Near-term excitement includes Reserved (100k tickets, unique value), the Large Taste Model (improving active days, retention), SongDNA (100M users), and music videos (new releases perform better). Longer-term, he is excited about the remix/coverage product and 'Talk to Spotify' for interactive experiences.

“In terms of actual products, I would say right now, the thing that excites me the most is Reserved. It is probably the feature that the most people ever have said, 'This is the best thing you ever did at Spotify.'”

asked by Jessica Reif Ehrlich · answered by Gustav Söderström

What is the outlook for advertising growth, and what can Spotify do to drive momentum in this high-margin business?

Alex Norström explained the transition to a proprietary ad stack, with 99% of impressions now on the new system and automated sales channels representing nearly 40% of Q2 ad-supported revenue. Active advertisers grew 60% YoY to 33,000. Christian Luiga added that scaling automated sales will improve profitability, aiming for 40% gross margin over time, and expects double-digit growth in H2 2026.

“The two things to think about is obviously supply and demand. We'll start with supply. The supply picture has actually never been stronger. It's not only about user growth and reach, which is obvious because we grow and then the reach follows.”

asked by Jessica Reif Ehrlich · answered by Alex Norström

Are you surprised more artists haven't signed on to the AI music tier, and what is stopping them?

Alex Norström and Gustav Söderström clarified that deals with all majors are not needed to launch AI music features, citing strong momentum with UMG and Merlin. They emphasized the focus on 'consent, credit, and compensation' for artists and mentioned a research preview is expected to gather preference data to improve the model, rather than waiting for a full catalog.

“So the answer is we do not need deal with all the majors. We would like to have as many artists as possible, obviously, but we don't expect to have all artists.”

asked by Rich Greenfield · answered by Gustav Söderström

What's informing the guidance for slower MAU growth in Q3? Is there a change in competitive environment or campaign intake?

Alex Norström explained that the Q3 MAU slowdown is due to strategic product optimizations in emerging markets, such as tweaking sign-up processes, introducing friction in the free tier, and personalized ad load. These changes are aimed at driving higher monetization and conversion, not competitive shifts, and are not expected to affect subscriber growth in the near term.

“So our belief is that this is going to take some time, but the shape of the growth curve follows other markets. And the way to think about it is really when you start out in the market, you work on getting product market fit and get some end use.”

asked by Batya Levi · answered by Alex Norström

Can you talk about the drivers of the implied acceleration in operating expenses in Q3?

Christian Luiga clarified that, excluding currency and social charges, Q3 expense growth is expected to be roughly consistent with Q2. Gustav Söderström added that AI investments are variable (compute, marketing) and controllable, with a focus on cost efficiency (e.g., 'Chirp' tool) and moderation expected in Q4, emphasizing these are not long-term CapEx investments.

“So excluding currency and social charges, we see our expense growth to be roughly consistent in quarter 3 with quarter 2 growth.”

asked by Doug Anmuth · answered by Christian Luiga

How do you believe time spent can evolve on Spotify, given expansion into new formats and personalization capabilities?

Alex Norström highlighted that Spotify's engagement spans more devices and contexts (sleep, studying, gaming, cars) than other streamers like Netflix or YouTube. He emphasized that 'active days' is the key metric, with over 100 million subscribers spending more than 20 days a month, and this metric continues to increase, correlating well with lifetime value.

“And I think the important comparison and observation to make here is that we're very different from these other streamers. When it comes to engagement, our engagement typically spans many more devices than our friends here in the industry, whereas most of them are big screen and maybe small screen.”

asked by Justin Patterson · answered by Alex Norström