Spotify Technology S.A.

Q2 performance: strong growth, margin record, and free cash flow improving - Revenue +15% YoY (constant currency), accelerating from +14% in Q1. - Gross margin hit a record 33.4%, +193 bps YoY, modestly ahead of guidance by ~30 bps. - Free cash flow: €797m, +14% YoY (timing-related softness vs Q1). - Subscribers: 300m total, 1m ahead of guidance; added 7m net subscribers in Q2. - MAU: +12% YoY, net adds 16m (about 1m below forecast), with Europe and North America outperformance.

Outlook / guidance for Q3 2026: growth remains healthy; margin moderates slightly but stays ahead - MAU forecast: 788m (+11m from Q2), with emerging-market product optimizations included. - Subscribers forecast: 305m (+5m net adds). - Revenue forecast: ~€5.0b (~+14% YoY), implying continued ARPU growth and improving ads. - Gross margin forecast: 32.9% (about +130 bps YoY). - Operating income forecast: €670m (reflects higher temporary Opex and AI/marketing phasing). - Full-year expectation remains positive: margins and free cash flow growth expected to improve in 2026 on a full-year basis (quarterly path can vary).

Strategy shift in free tier (important “good vs. bad”): more friction to drive conversion—at the cost of Q3 MAU optics - Spotify is adjusting ad load / product optimization in select emerging markets to increase conversion to paid. - Management explicitly expects Q3 MAU to show the effect of increased friction (i.e., a likely negative/surprising short-term metric), but argues it should not come at the expense of subscriber growth. - Investor takeaway: conversion-focused monetization, but expect some MAU noise.