Spotify’s latest earnings highlighted a new challenge for the Swedish streaming giant: continued growth. While the company exceeded Wall Street’s expectations for the first quarter — the first fiscal period under new CEOs Alex Norström and Gustav Söderström — its sales forecast fell short of analyst estimates, sending shares down nearly 12 percent today (April 28). As the new leadership charts the next phase of Spotify, they are heavily dependent on expanding the platform outside of music, betting that the wider ecosystem can drive deeper engagement as growth shows signs of slowing down.
That strategy was on display yesterday (April 27), when Spotify launched a new workout hub that gives free and paid users access to workout playlists, guided sessions and more than 1,400 Peloton classes. The move builds to an aggressive expansion into audiobooks, podcasts and fitness now, aimed at increasing user retention and time spent on the platform.
Relevance push shows how users are already engaging with the platform. “Hundreds of millions of playlists are made to do yoga, go to the gym, and so on,” Nörstrom told analysts on an earnings call today. “This doubles down on that trend.”
Spotify users have created more than 150 million fitness-focused playlists, and 70 percent of paying subscribers are active every month, according to the company. The new hub builds on existing fitness content, including classes uploaded by private instructors using Spotify’s ad-free video tools.
“If you think about it, this is what we’re really doing: we’re using our platform to fill a need between creators—like a fitness coach—and users,” said sNorström, noting that he himself uses Spotify for podcasts, classes and audiobooks while playing tennis.
In the January-March quarter, Spotify reported revenue of $5.2 billion, up 8 percent year-over-year. Monthly active users increased 12 percent to 761 million, and premium subscribers increased 9 percent to 293 million. But despite those gains, a weaker-than-expected weather forecast weighed on the results. In February, the company increased its monthly subscription price from $11.99 to $12.99 in the US.
Spotify under dual-CEO structure
The Dual-CEO framework separates responsibilities between strategy and product. Norström, a 15-year Spotify veteran, oversees business strategy, while Söderström, who has been with the company for 17 years, focuses on product development. Key to their approach is a multi-format content strategy supported by AI-driven features.
Many of those tools are gaining power. Spotify DJ, which delivers personalized, voice-guided music recommendations, is approaching 100 million users. SongDNA, an AI feature that provides contextual information about tracks, has reached 52 million users within weeks of launch.
Recently, Spotify launched a feature that allows users to view and edit a “Taste Profile,” an algorithmic summary of their preferences. The tool allows listeners to control recommendations by specifying what they do or don’t want to hear.
“These features point to something bigger: a transition from a world where Spotify recommends things to you, to a world where you can shape, direct and interact with our platform,” Söderström said. “This level of intuitive control empowers users like never before.”
That growing flow of user input becomes a valuable asset. “Now people tell us, in English, that they’re going to run and they want this BPM and that cadence and so on,” says Söderström. “We get this wealth of data that we capture, train on it—this creates a unique advantage for us.”
