Summary: Spotify, a streaming company, will release its second quarter financial report for fiscal year 2025 before the market opens on July 29. The investment community generally believes that Spotify still has the potential to maintain steady growth in revenue and profits this quarter, based on its strategy of diversified content investment and subscription and advertising synergy.

Review of last quarter

In the first quarter, Spotify's revenue was approximately 4.19 billion euros, a year-on-year increase of 15%, and its gross profit margin was approximately 31.6%. Although the company has not disclosed specific net profit or net profit margin, adjusted earnings per share and other data, the outside world generally believes that its profit performance is relatively stable.

During the same period, the number of paying users reached 268 million, an increase of 12% over the previous year, showing stable appeal and retention. Its payment and advertising synergy model still drives the company's overall business rhythm, and it has gained a good number of new users in Q1.

Second quarter forecast

According to Bloomberg data, the company's comparable sales in the second quarter were 4.273 billion euros, and its adjusted earnings per share were 2.03 euros. The company mainly relies on paid subscriptions and advertising revenue to drive growth. According to the situation in the previous quarter, the paid business is still the core pillar.

Main highlights

Synergy of diversified product matrix

Segmented content and playlists for different user groups are expected to increase the platform's attractiveness and support the continued increase in paid subscriptions. Advertisers can also rely on these rich segmented scenarios to find new touch points and use platform tools to achieve more accurate delivery. Many analysts believe that as long as subscriptions and advertising can form a more sticky linkage, allowing users to gain something in multiple scenarios such as listening to songs, podcasts, and interactive content, it may keep the growth rate of paid users at a high level and strive for more display opportunities for the advertising side.

Continuous upgrade of operational efficiency

Spotify continues to emphasize refined control in copyright costs, technical infrastructure and operational strategies, hoping to ensure that it maintains a healthy gross profit margin when expanding to more regions. Combined with the gross profit margin performance of 31.6% in the first quarter, management is likely to use a combination of centralized negotiation, intelligent recommendation and differentiated revenue models to improve overall efficiency.

Innovation investment and content ecology

In recent quarters, the company has continued to increase its exploration of diversified content forms, including cooperating with various creators to release special podcasts and limited-time exclusive albums, aiming to give the platform more differentiated competitive advantages. The second quarter is regarded as a node to verify the effectiveness of innovation investment. If the number of plays of related original programs can be observed to increase, both the advertising side and the subscription side may benefit, driving the growth of total revenue while creating a virtuous circle.

Analyst views

Raymond James: Spotify's handling of content ecology and advertising monetization is relatively mature, and there is still great potential for structural optimization. It is expected that the scale effect will be further released in the next few quarters.

Barclays: The company is expected to push up short-term and medium-term profit margins again, and help the subsequent growth cycle to be more stable.

Pivotal Research: Spotify's operating system and cost control capabilities are very outstanding, and the company's paying users are expected to have growth potential.