SPOT - Earnings call transcript Q4 2021

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Operator

Good afternoon, and thank you for standing by. At this time, I would like to welcome everyone to Spotify's Fourth Quarter 2021 Earnings Call and Webcast. I would now like to turn the call over to Bryan Goldberg, Head of Investor Relations.

You may begin your conference.

Bryan Goldberg

Great. Spotify's the XXXX having slight issue. to and Conference a welcome for apologize delay, and Fourth Earnings Quarter Call technical Thanks, we were

us CEO; Ek, CFO. Joining be Vogel, Paul our our will today and Daniel

directly -- will can S-L-I-D-O afterwards, be Slido, Questions vote .com the And into can and We and submitted ask by questions. #SpotifyEarningsXQ answer we'll with using relevant. from happy they opening participants Daniel excuse start [Operator all going Analysts Paul. can your the be on to questions find me, . #SpotifyEarningsQXXX. comments most to the and code Instructions]. slido.com, then questions

Before the safe we cover quickly let begin, harbor. me

company. and uncertainties. Actual During subject letter forward-looking this and of to future shareholders including and certain These the call, assumptions to Exchange in on based risks materially with projections our could the factors statements, call, statements current Securities on that discussed be about today's filings are or are Commission. expectations we'll because differ making estimates results of the and performance in

financial this non-IFRS refer our Form to be and furnished in in letter Daniel. we'll Reconciliations between non-IFRS And also measures X-K. to that, today found our certain IFRS Investor can it section with to Financials over Relations call, of the shareholders financial turn our website During on and also measures. I'll

Daniel Ek

type our of the doubt that and here have a address that of everyone presented joining of all several to ways. questions been challenge XXXX into us. grow modernize intent Spotify had I implementing to and greater its to work measures for and partners critical scientific would the meet first this many but Hi, already test is to and communities. transparency. it creator in employees and And thanks the opportunities. that When weeks provide the expression at new and read invest teams chance podcast assumed head with this our have in a last learning we've you we hope Spotify. response heavily to There's misinformation And space help believe days no there's that our from right. we experts we need few the All with We Obviously, still space users. notable with will creators, of the done, it's a of safety for and balancing entered in several and we be pleased while it role And to received evolving creators a product combat medical help partner functionality and kind platform in supporting to capabilities play continue on. and teams our number I'm

demand general. to causing was to in this. XXXX In enormous seen consumer our our eventful the case, behavior, this And has some exception. the QX, momentum. And to in continued biggest first reversal did end QX. our of we XXXX. quarter QX been the XXXX. Historically, shift. pandemic, has and no And Spotify, of no half throughout have for to was and Throughout shifts saw to Moving trend of course, results. back see headwinds by world disruption our mostly and QX Spotify play we on an an in advantage been business curves these exception in XXXX But the positive

business, in continued was Twitter and driver that engagement saw quarter, see to our this audience Spotify campaign, a total platform before. ad than while metrics, second year-over-year. meaningful XX% And Wrapped being Gen more from last million trending different a I trajectory a driver its on Wrapped Spotify's get of MAU and cultural and unprecedented driver windowing we we've our both revenues Advertising -- strong blips, our our fact, reach. overall annual and to the broader saw podcast gains. to users, MAU seventh we which XXXX in see the to the than revenue was momentum the used most for record of market levels across performance, will our result to a was to well, this listeners climbing date. growth XX% proof performance strategies exclusive test it's showing confirmed significant continue ever. was significant points with history. And of more turning the this worldwide the up in the U.S. for topic it listening Ads, continuing more highest seasonal phenomenon key prone day, is the In Z year-over-year, quarter. audience. we is growth a And It's on continue With partnerships amassed coming more and QX proving XX% as QX quarter also become ever engaged business that remarkable had share that successful of of beyond. is TikTok growth advantage of podcast podcast largest the launch we highly And that audience #X most, XXX #X strong MEU

feeling So long about to XXXX. good let's But term, move which focus try time. is I the very overall, my to where I'm

patience. We and category-defining are building takes a company, this

further, the the while we've describe making and as advancements And some been, all still It subscription it's I the it been And And it music leading doesn't Barkell don't future described, surely encompass Jim may we're all [ph] think on is, the service. this bundling audio. working in either. about we've as initiatives Internet. where properly constantly us unbundling reflects on that captures the

on So way economy. it the some and People what is creator creator economy for Well, on it taken different the time of then? have many been a to describe subset we about talking has meanings. the best focused are

of as the and the have we've us, the creators surface And creators. this biggest of all largest is For see only leveraged for to the Spotify millions artists I creative scratched of track the date, Internet. of the professionalization to potential single audio. their for opportunities that much think rapid keep flexibility a the more I preferred be trend creators, one of on And to the audio become open in will, dynamic And communities. and one-size-fits-all and greater to power To and entrepreneurial, the the unlock will extraordinary potential a more of will them of the accelerate we which model move destination give we business course, platform. from

We greater will provide reach.

significant this while is access needs not the lead will tools to the jobs revenue be creation all limited I can to And creator personalized of Spotify, to will meet for millions a ecosystem and We from this that each provide streams that think diverse of together alone believe economy. creator. which of XX will And to on more the that Spotify we we have the building increase than whole million global are that million scale. total to the work is platform today. the the ecosystem XX creators, we encompass enable active a will

this news grow businesses Spotify. Spotify creators market flexibility based subscriber underway. And bring Open example this work the to I it from early success, options audio businesses range one that small- and to more crystalize We to increasing medium-sized evolution momentum. full book by whether to wondering our base on an base platform existing started in of their services on we retain time, there this well with a of continue platform. the you This control them creators an you Access to it was outlet, over leveraging me grow. with will to to enable ever-growing invest term. around major and and brought Anchor of already near the their And publisher audience. XX they're And as independent should It tools, do while recent take and creators, expect the the think support clear more means their So know means creator what million can to wanted for some giving of Anchor of a creators includes the to market. for me we business. activate year but of broad is to or opportunity of feedback infrastructure Spotify last are them that content podcaster, acquisition the paid in subscription resources to can And resources number reach to those this heard And us

competing seize that a this the we're piece the of good well audio of to this will deliver to I believe opportunity, positioned to entire be ecosystem. adapt uniquely many creator changing for While environment and

now go we to believe add also So to going before Q&A, you're thoughts. a Paul, I few

you. over So to

Paul Vogel

for Thanks, Daniel, and us. everyone, thanks, joining

add QX, above on by were to While Daniel the at in ads XX.X% an originally our margin was Relative range. to of by of gross color related margin, guidance our was which costs partially in expense top our KPIs, benefit offset to our QX. a wanted end key most forecast, of bit touched finished business. I on investment for That that targeted a our unforeseen our shift helped gross

still finished have margin above gross of top our would together, the range. the Taken end

Some QX margin of costs reflected QX materialize the investment are gross now didn't guidance. that our in in

at XX XXXX the we benefit to adjustments. XX.X% Full we margin meaningful XXXX. relative full Looking did reported our favorable to XXXX of of progress close royalty year made XX.X%, year in basis from points

was still year-on-year. improvement them, excluding an even margin However, gross

continuation as further a in we you contribution. XXXX, XXXX our grow drive business for the saw margin advertising in growth into of Looking and gross favorable Marketplace expect trend we underlying

well podcast O&E Megaphone. margins, We as as the in core our also expect improvement both on on front

plan margins. to XXXX incremental XX% XX% a the gross goals invest X Given in seeing, initiatives users, an XX% billion traction revenue do content of in towards with encouraging we music eye CAGR our and long-term we're to and plus

us in While is us years, these seen the our path progress gives over right over consolidated that certain the exactly the and investments term. in this confidence long progress conviction we margin may given X has that increase investments to areas alter on we've gross the the slightly are past it

to upon guidance. want I to approach Finally, expand our

to we As plan we our targets. shareholder letter, no longer in yearly said provide

and each estimate a outcomes. update on We as in single by guidance a range business providing metric of we of simplify trends will the instead will quarterly share current continue a the way approach for to investors our to

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at XXX subscribers. We're We expecting QX. that approximately the in revenues million For QX, of keep please total level the mind to margin to in of be primarily different cost XX%, in we materialize in subscriber that due that QX a QX, adds exchange. didn't tailwinds respect With MAUs million to in from basis foreign course gross of activity seasonality $XXX for the and anticipated expecting total points initiatives. Investor will we're and business, to are benefiting to financial that come I'll $X.X billion, that, anticipate XXX hitting drivers net Day we expect over We're other to the an Bryan. QX, also this results hand metric info. we'll promotional more the over investments back to announce big campaign Stay our with the making XXXX of we where tuned things during talk host for about over we plan the to due And excited long term. and expect

Bryan Goldberg

Thanks, [Operator Paul. Instructions].

protest? public question the to left content And today Rich censoring changed have content. is, his Rogan. your on the in Greenfield given on in is advertisers it to artist platform stance any a slope slippery first Spotify and pushback Is you've Our Joe from come going clearly question

Daniel Ek

Right. I'll take one. this

that the as for following health already which policies advisories, a So that important issue, with content post talked medical well I with and content of our on to experts, noting have my our communities. as to push as out. platform took But noted think scientific top users. but raised take really of It's in content proud We're And has concerns opening. to course, mind from the I I about we as know of well, COVID-XX I begun trying the the safety step worth week, very it's balance expression roll and by back. creators a physicians the my the steps both of is issue this this I'm complicated this creative been in

else. on So based is the do I called form important creator anyone change we don't it part one that cycle based nor or think here our any policies media on we change

those our Our in written policies external of this with input while markets. And right Joe numbers and audience, internal actually have for podcast XX they massive He a in do by space. experts he's the from more I has carefully abide than believe policies. And also been the are to platform. #X has

you of and content our about amount a broad we're for something So of so hearing take about as think advertisers has And partners. on But have too range well. a for the and think everyone think course, when ads is you that platform, I Spotify from in I there tremendous confidence business, our really to that. of here

Bryan Goldberg

We're years facing to and business X to Kramer. All our of post in after margins opportunities the publishing going renegotiation you raise the publishers? to next role of music right. do Nearly and go direct gross labels from material given Richard listing question rights see the your XXXX,

Daniel Ek

And There's the true, renewals our I built by even back, every that far we're kind the been is that's is and gross renew constantly also in margins one good more, an have that more, think that a been XXXX, to success function this that better. creative for we Marketplace and of much important more don't out with these we've see and building expectation big negotiations much those before them alluded done and And And top. that that you always will building it this doing. and I people if on are publishing really on just and think surpassed on tools building on. outcome a we in -- A upcoming that function is break we're not the and services about we're But and these we Well, based year. we but into misconception making tools on renewal alone. impacting can remarks, that But see it services of the part step thinks that And of think positively those based perhaps do of that We will shared be talked efforts things opening pretty the But going if a though the are quarter, to all be things example label quarters year. of #X creators licenses. everything my is having. that it's for gross we've were everyone and way. they I say and I prior this that been industry working it's that you the have this is licenses more constantly that because those over margin, our and take that story. has platform,

Bryan Goldberg

right. All

on net that the use are past Average Lu million for sub there is any Mario years, adds subscriber cause from historical? trends. question still takes annually and Next net benchmark that few add the divergence XX a would from And to for puts XXXX?

Paul Vogel

Mario. Thanks, Yes.

you So first, at we additions year any that users comments that my we I'll anymore, we're XXXX. I although if and don't in just subs in giving kind is of full in for opening reiterate said change look net achieved guidance not XXXX, both the material into trajectory what see

at X different Last year. QX and of seasonal trends yearly how throughout types XXXX. of about look we've year, particular, last more we're you is patterns We heavily X. then the And promotional each into high some see has when more we're of increasingly seasonality of for the QX in but actually to in XXXX shorter the our likely again X particular, changed What of over less changed weighted lengths, varying campaigns last frequently important us become to cadence in in seen for QX, a we which subscribers similar years had growth. year, couple at that's And seasonality and sort So thinking numbers. activity. level just the at there's

Bryan Goldberg

Right. All

term. revenues, Talk becoming Rich of XX% XX% from not XX% the advertising on to advertising Another if opportunity. about question longer Greenfield

full the think longer And how no about guidance, trajectory getting you puts year are what of do the key you're XX%? giving and to While takes?

Daniel Ek

Thanks, Rich.

play revenue So in don't I many these hard past. alluded think of out. and when predict be long overall options, think this going think obviously, will you I the to I've I stream. exactly platforms different content this at look I term it's single to future the mix the are think, platforms between And to in how it in space,

revenue both going paid paid. the content adding and are advertising obviously as that advertising will there And other more there We to be growing just and paid we're from started mix. platform then some and think be and it's started having about the really I multiple streams, well. with start into

So combination the and I really think term a it's a carte of that la long subscription, be advertising mix. revenue will

present that's the amount little see of a things at obviously really, the the And such It #X thing moment, this down Now as And things. other see stretched puts horizon, specifically primary advertising, for enormous more advertisers. with that is to an X is comes to at moment And term, introducing inventory. it's inventory. international. demand One takes? what things speaking is from SPAN you primarily. long us We and we're more why bit then and

out well, the to start platforms we and don't exception think U.K. many bit monetize will international So I to that. but a be takes markets. time the little more it monetizing very U.S. an

source. has So long going really years XX, a the own #X was you market in becoming markets, now geographical term. worthwhile a remember today, in being built revenue read there in be more But term, audio in see as obviously will to I market. gigantic bodes was others, signals markets that not Spotify at as there's may you long They be in India, things, investments. ago, success. whether those Chinese that model that think companies platform huge Chinese that's Indonesia too, should absolutely And too. debate positive I'm into perspective too. XX But those the be advertising going had really it from confident the regions but such back investing with to large enormous And well I and viable the where how I advertising #X think the for very that's also there, a and to these a position by all

Paul Vogel

Yes. And of points. couple I add just would a

I QX, last we and of that for think, year, one, if XX% was from year, finished this just at X% the full in you at year. revenue, XX% revenue up look of

about business saw continue in of So of the would which in lot kind see growth of we strength Clearly, international. saw out there. XXXX. I echo advertising we the also what Daniel start XXXX, we said to nice a a of coming

last about presence making and I think had worked on well the U.S. blueprint this that push seen we talked you've our has the side actually the music the the really We've outside about a we're in expand advertising investment have, to quarter that both side. and growth we an podcasting for in us, U.S.

expect advertising improvements North making monetization the XXXX significant that that, we So throughout investment America. on we're drive will outside

Bryan Goldberg

going offset question Levi we ARPU. Can from How think XXXX? come is on in from increases Next the recent to Batya regions? ARPU premium in ARPU lower growth your premium price pressure trends should about

Paul Vogel

Yes.

in QX up constant just a X% X% a the guess on and back, basis. up saw currency year throughout I step we and taking a So nice finished ARPU growth

trajectory So the ARPU. we in about good feel

will in ARPU general, Some to the I'd price half of of And continue to first those kind bit will expect increases little we year, in in up of XXXX. a be help. say, flat the which

Bryan Goldberg

Thornton Matthew on A question from advertising.

this your seeing business. of in talked part XXXX? You've and supply-demand key the supply-constrained supply being drivers you're update Can you about on us the of conditions in

Paul Vogel

Yes.

demand-supply couple things the of say a on I'd here side. So

well in increasing. First in the as as in a seeing particularly We're We're percent. podcasting. increasing general. podcasting we've across music consumption all, engagement overall of seeing Well, platform, grown podcasting

We're double is that which all So in up more quarter-over-quarter. to great. SPAN, inventory, of is digits seeing more publishers leading

to inventory inventory be who to into to with giving inventory. more And then for well. we seen allowing opting then And sell. the also when to of and us a that. sell the we're you platform on monetize good that's spend is because So us And that platform, what advertisers able monetizing SPAN, people they're have even we've more we're part see more returns, really more get to want

more in seeing this SPAN are People of an flywheel is platform. into performance want effect to well. of So we're then part the advertisers the adding ecosystem bigger more be where even really and inventory then nice going

to So well. that's into for worked well, Anchor next be be as of other really potential a year up strong strong as opening SPAN initiatives. well Obviously, as number the will really

Daniel Ek

only of And the about audience the really the well. expanding creators is, as more the the we too. I'd have, the obviously, but we it. think more it's then And The number thing also Yes. inventory more have combination come we place It's of users add function both a as have expanding I to more creators, creators will here. really against

that's sort with And question key this. another of audiobooks, your So cetera. alluded that you've some of of component to et in

Bryan Goldberg

And have right. We've for your the Do got All XXXX? hi-fi on contemplate increases in any Matt. What's question guidance we does another price tier? any the update delay? been

Daniel Ek

right. All

start guidance. I'll then speak question can and the Paul the So with to

we and So that's especially yes, ends of that about mean, I up many the talk features to licensing. into music related

I this any other on specific to bring dialogue to So constant partners with than our really we're say market. this announce to can't in that

Paul Vogel

Yes. then increases. respect to with And price

where on material at go the changes. back point We characteristics haven't gross price there wasn't some we really in anything churn to good when well material time. in intake as feel did there, wasn't about make we as increases, year any I the anything earlier commented this

we but pricing any in moving increase updates comments place, forward. good about no So already feel the or on put we've additional ones

Bryan Goldberg

of The million? on incremental premium guidance or in Is that's you from On first next some premium to promotions growth can is quarter? question $XXX on from sub for your subs, come weighing impact there sub the Deepak. going color give any us churn changes

Paul Vogel

Yes.

about lot earlier, So year. the little promotional this more a the kind bit seasonality bit It's I little a throughout really let color. but and me cadence the of addressed just a give

Last and campaign promotional QX, tested said, in seasonality go couple of always and QX back and campaigns additional years, always QX I done and we there's we had an QX. a year, in QX you QX. if between as So historically, relative QX actually some to

and actually X having had instead bit each campaigns length period. in were so little campaigns, shorter we a campaigns, of in those X And

in the XXXX. impacted that the that in will and And likely so seasonality XXXX, seasonality impact

at general, bigger it Additionally, when QX for quarter to you a in bigger become and look just us. continues

so lot of also, one. of of traffic success Wrapped you to the in campaign incremental then QX, both drives And which And saw seasonal the success number the a Spotify.

the it monthly just promotional churn core at continued the churn, cadence to part you churn a to churns. how of our of year. so or it year. It's become And at it's really And trajectory When every our out in also throughout QX our smaller is QX while rest our subs the respect part don't the general, tends look strong of we look the now be. from hangover to a adjusted continues overall to with of picture about And when just follow-through Part of feel good how you give down of has down. churn subscribers, guidance, the we come year-on-year. we've

Bryan Goldberg

Okay.

guidance? the into Andrew gross on quarter decline? content gross driving How Next do margin year-on-year investments anything there play much question margin. first from Is the Marok notable

Paul Vogel

things QX. was test got One few to a we going test an were QX. That mentioned, QX. there in There's is, pushed to Yes. in initiative as I

There's So will have first of rest the of a there's And lyrics little impact. other bit things, an some there. is investments. few which year the incremental a

particularly U.S. seen you've in of we've lot on success, As side, the a content had

core innovation be the still current international regions under well we general, was 'XX. gross so into the seeing is And I bit margins of say a the that I'd O&E publishing CRB then spend. of how U.S. and progressed U.S. as on continue and we at and a you years. and side. content newer the rates when things are of about impact of And podcasting that operating well markets well the year-on-year, strategies last look over on And an advertising. lastly from as a in Marketplace benefits some and we're And gross lot little the margins and It and the of as X so then said, lot as in as growth, 'XX to the core in we're again expanding content but go to sort it's our in really good on a fundamentals will leverage, feel as will particularly doing up

so really giving -- done, giving in And that XXXX, in gross already to us confidence margin that what to or invest we've is continue in which it's XXXX. us confidence

Bryan Goldberg

All right.

StreamOn X years. X Next question the a as from significant current Daniel, you billion previously the implies Justin last over MAU billion the event, What user user coming to a from to key opportunity it the base? opportunity. Patterson are get spoke at the on there step-up year investments

Daniel Ek

both you're on lot XX consumers That million content, see coming we're to alluded that effort creators to the very, a today active total opening with creators and of in think years. Spotify creators building, but I remarks, my amount we some alike. going going exist of for on in key Yes. this a more in engagement very the Spotify the is that from XX million to that tools

it's to by saying will that want going I hear end about their You're during think, push. audio generation to you're of of going will, next But Investor talk Day. expand look to lot we what bit our define totally a engagement and would this little a a creators consumers ways in us this see that new more like.

welcome of plans coming I the our So there really more area. to hope learn that for about years are in all you to what

Bryan Goldberg

here. contain And quarter to then opportunity the controversy? separately, there additional to fallout? from potential questions are plan you reflect A in Ben in us? can And any the churn Joe put Rogan premium first Does steps Next of take the question audiobooks recent you from couple elevated for guide Swinburne. context

Daniel Ek

time, actually Yes. No. answer there. a first guidance think I'll I for I'll I'll -- question, Yes, start so the but

not in look the in and And in past, obviously, from to may is answer easy I So general, very still. when good the the about had measured healthy we that. thing. days. where we In And reflect line But early months I usually, what would what feel don't we've trends controversies know are say too it's the is top those are churn recent any relation JRE be. impact to

terms and is the outlined, my dramatic clear steps of the in Sunday publishing we've we've to as things. taken steps our Three in policies So on I've pretty world. blogpost. them done, One that making

have Just That's probably side. done thing advisory next very notice platform an other late, that's and is content. second to has audio COVID-XX acknowledgment my and no earlier, done very, should this, and on it me. providing this big content we from But that's the

episodes et the like tagged then scientists, COVID-XX WHO, organizations a to with CDC cetera. that messaging this by and will all So and will link physicians accompanied be public

out speaking. You're going being right to we're notice as now this, this rolled is and

this will visible be episode top speaks So every the very about COVID-XX. at very very prevalent, of that

feel And what I us audio there. really the it's what in about So unprecedented any you'll service other see we're to compared days. coming good doing really do

last somewhat can audiobooks us? you is, I that X for So the So the modalities context think of there's in simplified. audio put then opportunity thing

We the audio have audiobooks the about speaking been in is podcasting, Paid which mostly call. then today past is what paid audio. But there's mostly also we've the business.

when to platform. the just creators. term, one that at So enabling this best of them audio of And forms way size all -- want fit. content best the don't when tools fits mentioned, they platform, multitude longer having multitude a audio creators, different enabling look think really what's to that enables see and I me place about we all. that this It's be for audio monetize the on I I of obviously we exciting for all is as it's And that

and through advertising. a may be be also but may through may that it also subscription it carte la be So

which the it's a our audio audiobooks, view, think subset is very So of opportunity. in is it I But creator -- obviously, important group, overall touches authors. a

for like excited there. you innovation can look markets I instance, audiobooks opportunity. just about to at very we're that at look And in long happening term, the that's China, So think

content why type me, come openness the to more on creators not the imagine there's in going to of that platform. about flexibility it's innovation platform. be be and it's in and that to markets a lot how vein you For And strange Spotify have should well. think really that There's lot of treat many more going to of our as a Western more we

Bryan Goldberg

Great.

of investments management's Coming the come gross the of to and years, coming last the margin few mix Sheridan. in Next headwinds off from update thoughts content Eric around can tailwinds question is you the us longer-term going or trajectory years? on

Paul Vogel

Yes.

changed start, think high at say, that go the hopefully, we'll already the in in of more has terms Investor in we've at at level, terms to to outlined unpack And as already about. all mentioned, long-term term, we guidance Day some time long that XX% where QX. Daniel we've to talked of over I'd nothing a the which have we So XX%,

say you feel actually is the the tailwinds, have. think of headwinds leverage a one. number would we about that's So like getting think we initiatives on I I what When we're nice and already number

than when a a revenue again, you rate faster at the than some up. hour, and So see increasing on year, content listening you for starting see more look cost leverage listening of we've per at that had per to hour we show

are a I leverage headwinds, period say we're benefits lot what opportunity. had on the areas is would incrementally are, so doing regions of in we for a against products bigger investing the more is the in right we seen we've now. time we're say, investing reason them because the of we've it self-inflicted, think meaning And I an would of even more that more the and

now expansion. And the to given business, future. more even sort near-term we in harvest core seeing of really like the off so to be more the incremental could we and long-term show mode are drive pay bigger in gross probably we're going But right feel investments margin margins what

think it. that's So we how about

Daniel Ek

would really I that But investments that you just we actually if you plan. were go actually levels making. is gross we content of add we're the when margins XXXX when that would for at what look XXXX was at down happened, with thing that ahead one and look signaled The to it, of

So content, in a which lot And these improves it's advertising too, those in that out are we've Marketplace, Paul that alluded business. of of some O&E strong in gross to way some things those, a it's very, very and been obviously margin. of investments other making our proving

very at that, light should that's our So and emboldened look we honestly you feel that by investments. the

Bryan Goldberg

right. All

your current How impact win-win? you terms both Morris Marketplace. expect Has your during it benefit how from the this a going partners And to you question And X-sided progression? Next expand Marketplace Mike do label on been gross contract can was forward? and period? driven margin for

Daniel Ek

Yes.

with deal I'll So this.

do very current my to say little more I So I to addition dictates. has I conversation. is like think that in the in it It's to our first period, with thing alluded contract contract would the prior whatever

have So a content you the that a have the set have platform we on a way and is that lot of licensing should of platform. dictate we think that about we this agreements that

all can to of a and on all that have of we that, tools addition there's platform into. opt that our and creators to consumers In choose top services lot

And on of those so types licensed our business. businesses of Marketplace content efforts existing are top

gross how that's obviously margin with means dollars gross dollar quickly is which, adds And we're services Spotify that that you're should course, in. Generally offering. if what's by as tools is they're speaking, business, lower there's that generated And that margin about me XX% you interesting or overall, more of and and software, margin each dealing gross for those come think like XX% so progression a up.

Paul Vogel

the only the on it's obviously really side, that it working. kind on give first purely though is, then in to gave material margin The again way I sure the gross about of a saw some a benefit. not you really assume just And That in in marketing number can increase gave think Daniel XXXX, even a all, the add to of Marketplace's is we contribution a would XXXX. in said, as I'm double talked of as The but number, being it, the contribution to we XXXX of it tools think marketing terms we we context more are event. of product. shows million side, Marketplace just up I respect of P&L about close it with really thing XX to type a

Bryan Goldberg

right. All

This on engagement. question Kramer. Another Richard one's from

far reopening on the of commute say and times? overall depend listening you're Does larger that on to this but of of does engagement? If same hours about base level subscribers, what a back

Paul Vogel

I'm not little sure here. per up. But I -- fully hours understand the question, so is I actually listening think it actually a might something missing user be

DAU So increase actually seen engagement really was this strong. is MAU. to year We've in

in overall up. up. we're actives per the user Listening seeing go was platform hours daily So

healthy is platform. the on actually and strong engagement So

Bryan Goldberg

from outlook. question A on Steven the Okay. margin Cahall gross

expect XXXX longer to you're lines? at as be an we leverage no it operating it relates the and While realize operating of Or annual gross year a giving to year should do more expansion? guidance, investment margin you we about as think

Paul Vogel

and where and gave mentioned, and Daniel margin Yes. core the really in that well. kind of commentary gave as beginning. gross be. are ahead see, reasons in I of I It's actually some I of why puts sort schedule where the do think of I we it's the would terms probably we thought would at we the has there's say one takes gone I of

to areas couple for And in gross That the on so margin being in to year, invest. continue improvements this we're we said, years. of past than we've thought the going faster seen

do we're there of We've ads things So takes opportunity margin. about the believe some content as really to puts things as business actually well on talked you're and to ad I outside going revenue think increased do operating the there's gross investment. doing And we some which, the side the see U.S., grow side. in the the on significantly again, side, jumpstart we on will the an the

we of XXXX puts we're feel and takes, where overall think So good really I kind with of out and lots we but came of how heading.

Bryan Goldberg

Okay.

you of priorities timeline us Deepak, be on this round of the would your next label round? one relations. some in And from for question this the on Another negotiations? Can what refresh label next

Daniel Ek

Yes.

what So of would round I negotiations next always. timeline the for is say is label

have being extended renegotiated again much deal that's constantly negotiated we So or and pretty some always.

priorities is rule. more working that be on don't enabling that the towards In exception to flexibility think So just I XXXX we're platform. an will general, the key

the you be on fans audience, focused going from because where economy. should directly listeners we really expect to platform the us wave So to casual next of we creators their -- that's as that to believe these these with can we engage more superfans, in negotiations where music act unlock the in want true that's go to growth a can

Spotify and days the early really about of take stopping back at you like kind If of look a really much step was of piracy. it,

weren't good most more economy it's we simple As really majority step did globally the that meant and was paying the all. right, the next job think carte, model, in streaming. I music people which And exists. vast now way the la than towards a music And that that that. for one one currently is as music entire turning people of is paying dominant And you paying streaming. replaced industry But that. for the evolution a half think which we I is really the the were at superfans next of of we're paid And typically

you subscription service Now base. one go are alone for single we with one have subscribers, are see the ecosystem XX And getting an about. And that obviously, million millions people we services, music across every our is think the even fact Spotify back to in lots of because or could which not largest again music, XXX And XXX for which of where service of ago, people let now largest. hundreds or have million. most to the is subscription services love years I of all I these paying of X

far, that free of And just unlock the of next we we to I Internet. unlocking always unlock what's think comes do music scale the think real redefined will business been in. when think everyone I But this kind the paid with has now, So model. economy. it where here shows But monetizing in have one-size-fits-all we're growth I here true dollars a begin we with. is the right so was music we'll about through when have Yes, the that, that evolution wave that comes subscription. to That's be the and that superfans. And

of drive more on unlocking, people ways. unexpected up to too. and that me, ways from and move in engage for up superfan drive to flexibility, will a that, new is the turn, thing That enables way that focused monetization, casual people, engagement in to listeners all new will forms have more with show videos, for content So assets, I'm their creators the #X their use

Bryan Goldberg

right. All

North the to is competitive that remains Despite a to Swinburne. for being international be that most a Is is Ben from question runway and headwind? international growth penetrated your premium continues America premium Another willingness pay long most it that base. fastest-growing your region, or sign

Paul Vogel

first all, both. in definitely plenty of I we No, think think of -- think I growth we there's

markets, the lot seen there what really your think you get you've the sort then established a in then into mass markets, of after monetization in you monetization through and and critical after. you grow of and newer then comes more And areas comes grow I is that. fast

And what our all and across users we've regions. subs so growth in of seen healthy is

out last will MAU growth LatAm You've newer our of markets. lot of those some over and the quarters, of monetize couple coming in and World Rest of And seen of, a time.

dynamic that's think I so the And see at we play here.

that. in we America we're LatAm the continue as we to Europe. expand revenue So well after and as the will North to seeing and opportunity see about then feel of follow monetization the in good world, grow and And rest

Daniel Ek

obviously, sort that's I a the now that not not many advertising. in markets. emerging about I'd seeing years we're about of people would be medium markets One that the make viable is comment just case. XX additional made advertising really one did think emerging really And ago,

at subscription, markets. a a people subscription now paid means paid saying, these lot well, of be viable are can't in many looking of So emerging

well they as to in said, that And local But I you how these too. how investing market in that's think we're coming nuances untrue be that will certainly customers, services, to there behind. pay out turn what are the years. for

innovation we're front. of prepaid doing So weekly payments. doing that on a We're payments, ton

really We around ways that the the markets to pay really, really to all physical up see have took the staggering. subscription, tooks showing too. driving And cash It's cool is locally Spotify around world. collecting in for

Bryan Goldberg

you Mahaney are for X-sided in We've Marketplace this Mark business We're for to of bogeys X get? your time stronger on that or growth going more than do And came think going questions. in or had one big could from Two-sided got X right. how Marketplace. you about Marketplace any forward? XXXX. take proxies part How there All estimated suggest

Daniel Ek

see and in. if then Paul chime Well, maybe to I'll wants start

tools but it's an in can mean for tools the results more in pleased available So you think, alike. Marketplace. very about alluding a the I have just the more advertising of we imagine to et la carte this in umbrella that flexibility audiobooks, where sort really allowing payments, or imagine while with earlier for X-sided superfan of about And consumers both monetization, too the all of day various It's yes, creators been certainly about I'm it's a as I innings, ways cetera. have that now, early and

the I at products to we the umbrella term, how long potential of the lot ability It's consumers of think lots about of obviously, So you in our I there alike. that be we have. launch. on the there's unlocking to and creative think resonate in do the look really term, new and economy. grow and is with us near that And ship And to puts when gigantic. that engaging existing creators more calls the Marketplace, will number a for creators products are just Obviously,

always us hundreds, those Paul thing not experiments running So of talked to to puts kind we're calls, too. launch exactly if different of this the -- across and and something about think hardest are gauge oftentimes because earlier, thousands, I will for the when platform. The is

ways think new there Internet. is I to So consumers questioned. be I I don't want on know these in can those mega that resonate ways of That's will trend things a monetize But massive should don't and what say be which relationships, the to what the really by fact of that exact will that time. lots that creators interact and

Paul Vogel

And really on good just think about earlier, our I I progressing it's feel margins. gross but we mentioned I how add, would

the again, tools it benefit So really dollars of the marketing we've it are through that the in go seen and won't is I and and gross numbers resonating, but P&L. and profit services

Bryan Goldberg

markets from to launched that here question and how the a us Hamilton performed got update the We've performance in Great. on XXXX, relative they of you new you Okay. expectations? Can Faber.

Daniel Ek

a in. start markets, We exception of can Paul here. chime but lot I'll Maybe and out an break I won't can make probably then

you them. never you imagine Now launch when it's what

these we our So But in markets look most the honestly, back, one successful LatAm. bingo different And on of breakout had an cards I similar example, of the when had being times, that as think one ones. early we've made of the same highlights very we more Venezuela. before, of the a one markets is successful have the don't launches number over one we've when a batch It of follows we trajectory. made you much one very which that

where harder after launch easy, when that, will these when launched And where it launched a nowhere very turned little it just out and X growth growth and Argentina and driving. it longer. LatAm trend will markets, in on than years we turned tough predict market And ago very it and from easy of now, overall for to completely taking lot. sort bit growth Mexico you at instance, Brazil was a where out very that, take look over be many be the growth Early the to then Argentina Mexico was hard it's years market came on, So a kind LatAm. to impacting later you switched started of and be a

that the us be early I'm the see think they'll in start but part, markets. I in Spotify results small, of to coming the Obviously, adapting learning years the So going to contribution very will you're impacting confident these that and positively.

Bryan Goldberg

Okay, great.

closing call. Q&A remarks. some Daniel portion it to want today's to I actually, over wrap back going And for that's the to up of So earnings turn

Daniel Ek

one hope I thank And started. as We excited to our will we just the the Well, we right. accelerate like getting are. we're thank you're And about as wanted for really that. all also All you, to businesses call. feel Internet, joining I to for Bryan, and the really we you continue pace that work creators. up of innovation the for and that we probably that's the play and want the view, opening our opportunities as on the biggest more the economy of in role pursue one creator in is what, of

again. at quarter I platform about Investor to But will Thank will guys more tune you Day. the on first, on So live really sharing our you I'll in. I which be the forward Record, more The tomorrow. podcast, go look details talking our hope For

Bryan Goldberg

today's and available Thanks be the for Spotify on Replays. under Call Spotify also concludes will Earnings replay that app And again, A our Okay. joining. call. on everyone, website

Bryan Goldberg	Head, IR
Daniel Ek	Founder, CEO & Chairman
Paul Vogel	CFO

Spotify Technology (SPOT) 3 Feb 222021 Q4 Earnings call transcript