[Management View]
Spotify reported robust user and subscriber growth, surpassing internal guidance with significant increases in both Premium and Monthly Active Users (MAU). Revenue growth was primarily driven by the Premium segment, supported by ARPU improvements from prior price increases. However, advertising revenue lagged due to slower execution and portfolio changes. Management is focused on long-term margin expansion and has increased the share repurchase authorization to $2 billion.

[Outlook]
Spotify is targeting 710 million MAU and 281 million subscribers for Q3 2025, with a revenue forecast of EUR 4.2 billion. The company anticipates a gross margin of 31.1% and operating income of EUR 485 million, despite a EUR 200 million revenue headwind from currency fluctuations. Strategic investments will continue in AI product enhancements, ad channel automation, and content format expansion.

[Financial Performance]
Spotify's Q2 2025 saw a 15% YoY revenue growth on a constant currency basis, with Premium revenue rising 16% YoY. Advertising revenue grew 5% YoY, with automated sales channels as the largest contributor. Gross margin expanded to 31.5%, and free cash flow reached EUR 700 million. Operating income was EUR 406 million, EUR 133 million below guidance due to higher social charges.

[Q&A Highlights]
1. Question: Can you provide an update on product tiers and their impact on user experience?
Answer: Alex Norström emphasized the focus on engaging super fans and building high-value products. The audiobook add-on subscription in 13 markets is an example, catering to super fans and expanding access for family plans.

2. Question: Why didn't gross margins beat guidance, and what is the outlook?
Answer: Christian Luiga explained that while the company aims to increase gross margins through various monetization strategies, the guidance philosophy remains unchanged, focusing on certainty and strategic investments.

3. Question: How is generative AI influencing Spotify's productivity and product development?
Answer: Gustav Söderström highlighted significant productivity gains in prototyping and product delivery, with generative AI enabling more interactive and reasoned user experiences.

4. Question: What are the plans for the $2 billion share buyback authorization?
Answer: Christian Luiga stated that the primary focus is on growth opportunities, with the buyback providing additional flexibility. The company will use it opportunistically without specific timelines.

5. Question: How does alternative payment impact subscriber growth?
Answer: Daniel G. Ek noted positive impacts on conversions, particularly in the U.S., with improved communication and potential for a la carte transactions enhancing revenue growth.

6. Question: What is the impact of changes in the podcasting business model on advertising growth?
Answer: Alex Norström acknowledged the impact of inventory changes but expressed optimism about video and podcast engagement, with strategic adjustments expected to drive future growth.

7. Question: How is Spotify leveraging advancements in large language models?
Answer: Gustav Söderström discussed retooling the technology stack for generative AI, enhancing user interaction and data collection, which is expected to improve product offerings and engagement.

[Sentiment Analysis]
The tone of the management was optimistic about user growth and strategic investments, despite challenges in the advertising segment. Analysts showed interest in the company's AI advancements and monetization strategies.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | YoY Change |
|-------------------------|---------|---------|------------|
| MAU | 696M | 678M | +18M |
| Paid Subscribers | 276M | 268M | +8M |
| Total Revenue (EUR) | 4.2B | 4.0B | +15% |
| Gross Margin | 31.5% | 31.2% | +230 bps |
| Operating Income (EUR) | 406M | 539M | -133M |
| Free Cash Flow (EUR) | 700M | 650M | +50M |

[Risks and Concerns]
1. Advertising growth lagged expectations due to slower execution and leadership changes.
2. Currency fluctuations pose a significant revenue headwind.
3. Operating income was below guidance due to higher social charges.

[Final Takeaway]
Spotify's Q2 2025 performance was marked by strong user and subscriber growth, exceeding expectations despite challenges in the advertising segment. The company remains focused on long-term strategic investments in AI and content expansion, with a positive outlook for future growth. Management's commitment to enhancing user engagement and monetization strategies positions Spotify well for continued success, although execution in the advertising business remains a key area for improvement.