Spotify shares rode a rollercoaster during its Q2 earnings call, dropping 5% early but, by the end, rising 0.5% above pre-call share prices.
What clicked shareholders into their coaster cars? Probably AI.
CFO Christian Luiga told investors Spotify expects to spend €200 million (~$231 million USD) on “marketing and AI-related investments” over the course of 2026.
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Some of that investment seems to have been in a partnership with digital music licenser Merlin. It and Spotify announced today that they’ve come to a deal that “enables artists on labels under Merlin’s Spotify agreement the option to participate” in Spotify’s upcoming pay-to-play AI remix and cover tool, where fans will be able to prompt extrusions of artists’ songs. Universal Music Group signed a similar agreement in May.
As we’ve seen with Netflix’s earnings calls this year, investors are usually not thrilled when a platform says it’s going to spend more. But AI is the buzzword of the century right now, which might lead investors to be less spooked about spending in that particular area.
It could also help that Spotify revealed 25% of its users are utilizing its current AI features–things like its discovery chatbot Talk to Spotify, and its LLM desktop app Studio by Spotify Labs.
Spotify has also invested in developing things like “Personal Podcasts,” which it says will “generate short, private, personalized audio directly inside Spotify.”
Auto-generated podcasts that can challenge creator-made content for listening time are a bold feature to introduce when Spotify says its Q2 revenue was driven in part by “favorable podcast […] impacts, which more than offset music costs.”
That revenue, which grew 14% year over year to €4.78 billion (~$5.5 billion USD), was also driven by gains in Premium subscribers. Spotify said it now has 300 million Premium subscribers worldwide, with 7 million gained in Q2. In total, counting Premium and free subscribers, the platform now has 777 million monthly active users, it said.
Subscription revenue contributed €4.33 billion (~$5 billion USD), the lion’s share by a vast margin, to Spotify’s total revenue for the quarter.
Meanwhile, the platform’s Q2 subscriber gain put it very slightly below its projected 778 million. Spotify also projected less user growth for Q3 than analysts expected, and apparently blamed that on slower pickup in what it calls emerging markets like India and Indonesia.
It plans to raise prices and onboard more paying users in these regions through “sign-up changes, deprecation of old lower-end Android devices, carefully introducing some friction in the ad load with respect to increasing ad load and some limitations on our free tier as well,” Alex Norström, Spotify’s co-CEO, told Reuters.
Along with praising human-made podcasts as a revenue driver and nodding to the AI-generated Personal Podcasts, Spotify talked up Reserved, a U.S.-based initiative that gives music artists’ top fans (weighed by data points such as listening hours) access to early bird concert tickets, as a positive trend.
Reserved also ties into Spotify’s decision to make Wrapped a year-round, AI-driven omnipresence instead of an end-of-year cap. People who can see their ‘performance’ in a musician’s fandom and how close they are to the top might be more likely to put in effort to climb the ranks and get exclusive perks.
All of this is happening as Spotify gets deeper into challenging YouTube in video podcast and creator content arenas. It’s partnered with Netflix, and together the two are poaching more YouTubers than ever. They just sealed a $100 million deal with Jay Shetty to take his podcast off YouTube–and we expect to see more agreements in the coming months.
