Spotify hits 300M premium subscribers, unveils AI remix tool with UMG and Merlin

Spotify ended the June quarter with 300 million premium subscribers, a milestone no audio streaming service had reached before. The company added 7 million paying users in the period, 1 million more than it had projected, with gains across every region. Monthly active users grew 12% to 777 million, slightly below the 778 million forecast. The growth came despite price increases in several markets this year.

Subscriber growth and financials

Revenue rose 14% to €4.78 billion ($5.5 billion), in line with guidance. Gross margin hit an all-time high of 33.4%, moving the company closer to its long-term 35–40% target. Operating income surged 61% to €655 million, and free cash flow set a record of €797 million. Net profit reached €545 million, or €2.61 per share, reversing a loss of €86 million a year earlier. Premium subscription revenue grew 15%, while ad-supported revenue increased only 1%.

AI bets and the remix tool

Spotify is betting heavily on artificial intelligence to deepen engagement. Co-CEO Gustav Söderström said the company views AI as a way to win on both the product and cost sides. New features include "Talk to Spotify," a conversational assistant launched in July, AI-generated personal podcasts, and an AI DJ expanding to more languages. The most prominent initiative is an AI-powered remix and cover-song tool, developed in partnership with Universal Music Group and indie licensing group Merlin, which joined the effort on Tuesday. Artists must opt in, and Spotify promises consent, credit, and compensation. Söderström emphasized that the tool uses real artists' voices, not synthetic ones, calling it a different proposition from other AI music generators. A preview of the remix model is expected to roll out to some users before a full catalog is available.

What we're doing is something different, and artists see that our products are about real artists, not fake artists, and in the case of remixes, real artists with real voices.

Challenges and market reaction

Despite the subscriber beat, Spotify's stock fell more than 4% in pre-market trading and was down about 15% year-to-date as of Monday's close. Investors appeared concerned about rising costs: operating expenses grew 3% to €941 million, driven by temporary investments in marketing and cloud/AI spending. The platform also faced two major outages in May and July, and ongoing criticism over AI-generated "slop" on the service. Spotify has introduced artist verification badges and optional AI content labels, but some users have turned to third-party tools like SoullessMusic.com and SlopTracker to filter out AI music.

Outlook

For the third quarter, Spotify forecast 305 million premium subscribers and 788 million monthly active users. Revenue is expected to reach €5 billion, with operating income of €670 million and a gross margin of 32.9%. Co-CEO Alex Norström said the business is healthy and compounding, and positioned to deliver improved growth and margins in 2026.

We have a scale that few companies in history have reached, a business that is healthy and compounding, and opportunities only we are positioned to pursue.