11:48 AM EDT, 08/04/2026 (MT Newswires) -- Spotify ( SPOT ) issued a stronger-than-expected third-quarter revenue outlook, even though it said certain free-tier limitations in emerging markets could impact active users.

The audio-streaming platform expects third-quarter revenue of 5 billion euros ($5.76 billion), ahead of the FactSet-polled consensus of 4.93 billion euros. Premium subscribers are seen growing by 5 million sequentially to 305 million, versus Wall Street's 304.9 million target.

The company is adding friction to its free tier through factors including ad load adjustments in select emerging markets to drive "higher user conversion and revenue growth," co-Chief Executive Alex Norstrom said during an earnings call, according to a FactSet transcript.

"Yes, this will show itself in our (third-quarter monthly active users), but we believe it's well worth it," Norstrom added. "We do not expect it to come at the expense of our (premium) subscriber growth."

The company guided monthly active users to grow by 11 million to 788 million in the third quarter, while analysts expected 792.9 million. The expected net addition is a slowdown from 16 million sequential growth in the second quarter to 777 million users, compared with the Street's 777.5 million view.

Spotify ( SPOT ) swung to second-quarter earnings of 2.61 euros per share from a loss of 0.42 euros a year earlier, missing the FactSet EPS consensus of 2.76 euros. Revenue increased 14% to 4.78 billion euros, just shy of the average analyst estimate of 4.79 billion euros.

Premium revenue in the June quarter rose 15% year over year to 4.33 billion euros, compared with market expectations of 4.34 billion euros. Premium subscribers increased 9% to 300 million, exceeding analysts' projection of 299.2 million.

Morgan Stanley expects Spotify's ( SPOT ) stock to move higher amid a reacceleration in revenue growth and margin expansion, according to a note e-mailed Monday. Spotify ( SPOT ) reported second-quarter gross margin of 33.4% compared with 31.5% in the prior-year period.

Spotify's ( SPOT ) New York Stock Exchange-listed shares were little changed in Tuesday midday trade, and have declined 16% this year.

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