Spotify Technology (SPOT) 4 Feb 252024 Q4 Earnings call transcript

Company Profile

Participants

Bryan Goldberg	executive
Daniel Ek	executive
Gustav Söderström	executive
Alex Norström	executive
Christian Luiga	executive

Call transcript

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Operator

Good morning, and welcome to Spotify's Fourth Quarter 2024 Earnings Call and Webcast. [Operator Instructions] As a reminder, this conference call is being recorded.

I would now like to turn the call over to Bryan Goldberg, Head of Investor Relations. Thank you. ahead. go Please

Bryan Goldberg

operator, Earnings Thanks, to Fourth Spotify's All Call. and XXXX Conference Quarter right. welcome

Joining be Gustav today and Co-President and us will Product Christian and Norstrom, CEO; Chief Financial Chief our Luiga, Alex our Business Officer. Technology Officer; and Soderstrom, Chief Co-President Daniel our Officer; Ek, our

the We'll questions. [Operator from afterwards, be team. start with opening happy we'll Instructions] And comments to your answer

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

of about the certain making These forward-looking including the be future on we'll estimates performance to risks based assumptions call, this are and During and uncertainties. that company. subject projections statements statements, expectations or current are

Actual in because our results with of call, and deck on in filings today's Exchange differ could shareholder and the factors materially Securities discussed Commission.

also between Form to measures. Relations our measures refer financial website deck our financial non-IFRS of also we'll our on and be the furnished non-IFRS Reconciliations X-K. found can in Investor and in shareholder certain this During section IFRS Financials call, today

turn I'll Daniel. that, with it And to over

Daniel Ek

right. devastation All to to to Hey, speaking of you thank L.A. of our by start I we'll and for the joining the hundreds members and fans industries. everyone, We've help those efforts, creative to ways us. committed millions countless continue by employees, financial L.A. Spotify recovery for music to is look wanted the fires. home Bryan. caused support Thanks, across and to impacted.

is to perspectives and of always time the Alex future their where that aim they've and performance. can Chief we'll of to to biggest impact. of at Technology on spend turning working role to been I this Officer, to before bring January to our Officer, they've more calls share Spotify, And me the much allowed Since the Spotify. introduce Norstrom; in Business Soderstrom. elevated and have I've co-presidents leading operations the wanted Gustav future has I Product And And believed XXXX, Gustav quarter, Alex day-to-day Chief on which and to been the goals

quarter and and to highest gives Now moving all flexibility additions our better even XXXX highest us performance. MAU we second was for time. This runway years It out than closed for ever of our QX and plenty of a strong had to come. our We anticipated.

had cash We revenue, all, set flow our But also that's and subscriber for income high of year quarterly free first closed we we record margin, additions. not as highs operating gross full record out profitability.

adds brought continuous of in quarters drove X product this areas improvements like ongoing more video part, past is long to in what result over QX, over ultimately we And and the and it's the years the in incremental it's So this up system come and progress ahead. to today. that where growth? large innovation hard countless many of innovations that the massive our to to we something even made term Well, Audiobooks sometimes enhanced we if with timing tweaks has are the commitment really In to exact us predict.

given how want thoughts it's for you we consequential few growth? do share the product, Gustav, how to been on a our innovated

Gustav Söderström

Thanks, Daniel. Sure.

exciting I itself, we how the beyond the we team also But want including launching commend video shared, for updates at it some scale. new you got as So our made work done. this to proposition quarter, quickly

creators new happening podcast monetization our launch engagement really fast opportunities, For and experience. that new video moved were higher we Partner on Program we from saw for example, when looking podcasts and they received Spotify feedback video to

million one. popularity enormous And seeing are on users streamed more, Spotify, have than and And spikes we more video now even globally. XXX,XXX XXX video in podcasts podcasts over have

And than favorite held we we podcast Premium also to we November, users dynamic new the announced now giving are a sustainable eligible here. event creators couple L.A. their these ability a and shows ads. tools just business. already we early continue creator the to video more innovate actually, we last help months that their first pleased we're will to introduced into during watch results shows in And of and in uninterrupted efforts that enrolled. and from with by And XX% And incredibly turn networks have

Daniel Ek

Thanks, Right. Gustav. Well, okay.

Another huge year is to celebrated MAU driver behind our and this QX big and years. subscriber campaign, was contributor was exception. growth Wrapped XX our Wrapped a performance, our which annual no always

in more light Alex, campaign? want share to perhaps you happened the on bit a what

Alex Norström

X and Happy Wrapped Spotify, million Indonesia. days record first business. moment growth Wrapped year, but about users Brazil how XXX wild importantly, just is the like own we our significant deeply campaign. users And impressive XXXX's it's of become over engaged cultural Every with key the to, for personalized saw a This surpassing our markets driver Daniel. also care massive a experience. see in of it's their to Wrapped year, engagement within

means up and users visibility. there's creativity. change ton the that did more And in of heard experience few we the a success a because also it they from see wanted a to even the such a -- We massive become engagement, it's that bit despite phenomenon, more

So us win in really surprises XXXX a our from more experience. big overall, as evidenced for our numbers. in look But

Daniel Ek

All right. Thanks, Alex.

showed very, in was of. of what working can put a really see, you capable things year So many where play we well. the very we're XXXX are as And we

monetization, must am year accelerated working execution. the be And you still will I'm asking year XXXX? if define I'm coining XXXX it through, While was of the sure how we this I year of

this first, landscape to want The to So does faster improvements. constantly think the follow even practice? in leader. what ship to shifting not and play X things: pace, the I need is Well, I set require move like look it we will

to in previously Premium on tier industry. bring continue all core all and Features Think our fans investing the offers that together. artists in on higher-priced seeing also We're the historic to push video, experiences we've music new expansion going platform. more we're music think ways in discussed and and that will closer the and the

remain pursue our we aggressively with must as resources finally, opportunities. also disciplined And these we

we always remember I looks benefit confident investing more while I the and overhang of the rest than in a at little headed while you we're about this where different historically couldn't the we're be artists, And improved there's Christian and year. our an long I learn to will optimize continue for let share users. a forecast, and term all annual more expect But talk XXXX this to we see that that quarter, And alongside as forecast. in quarter creators growth healthy of profitability. deliver that don't look the to of doing we QX,

it turn to With Christian. over I'll that,

Christian Luiga

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

Let the then X outlook. give on our you color results some me and on quarter some perspective

total. in subscriber the added Our subscribers XX peak X XXX we net MAU strong. net X was for net million. million X performance represented our This million exceptionally additions quarter finishing additions, grew to XXX by at XX for matched best delivered while MAU We million ago. quarter the years

revenue grew and growth a Premium a was basis. with year-on-year Total year-on-year currency billion increases. revenue price ARPU driven subscriber on associated XX% XX% X.X EUR growth constant rose constant by basis, and on continued currency

X%, saw reflecting business campaigns. marketer and brand-related advertising of currency-neutral spending Our growth

some early sales progress in efforts. positive saw also automated our We

approximately primarily margin Gross by came XX profitability. to points, a content guidance basis due XX.X%, to in record surpassing favorability. Moving cost at

of full basis public XXXX. year XXX to margin rate relative at points the This of the full our improvement For expansion gross year, representing largest as margin was company. came gross XX.X%, in a

were strength. Operating XX the social was million in by of was EUR profit charges aided XX EUR million income in impacted which quarter, XXX EUR gross than Operating by forecast. higher our income million

outlook our reminder, they since we movements are the a As don't share in of for control. price outside forecast business

investments. Finally, as by well capital improved free quarter. Performance favorability. as the income ended year in and profile cash EUR record was in cash million X.X the EUR net flow was operating We the here driven billion with our XXX working short-term

looking ahead to So guidance.

know, many a as seasonally smallest entering MAU and we of quarter you terms of as well subscriber in sales. As intake ad are

X, million million increase quarter million As X. of over XXX an of MAU, an and increase X forecasting we million in quarter a subscribers, quarter XXX X are from X; result,

EUR forecasting billion of a X.X an margin of operating in income anticipate total We XX.X% and EUR million. also We're revenue. gross XXX

strong MAU not influx to by of prioritizing as developing we we lower are And exceptionally growing recent the quarter the users engagement continue with of focus to users. we X retention outperformance higher-value net markets. additions, driven respect had X an With on quarter in

XXXX quarters, within net marketing will additions this last product coming year be While amplify we X typical X for we seasonality, the our to remain in of full expect years. strategies the range the and quarter confident and

-- to growth with quality and additions, respect healthy year expect subscriber of LTVs. we net to customer focus on a another improving respect We with

expecting levels. both full albeit improve more relative give not gross guidance moderated margin operating XXXX and margin, are a do on we year for full While last we to in year basis, year's exceptional at pace a to

to to the said, alluded of to which our to our earlier, be expected quarter targeted the core offerings, year. a in Daniel seasonality. variable course may That our fourth margin than this bit cadence due gross sequential As more margin make gross plan is higher we quarter investments over make X

in to XXXX. generation we what our Finally, generated cash we free exceed meaningfully expect flow

On the capital provides. inflection having recent we're pleased emerging our and just this very first allocation, optionality liquidity profitability, generated year profile of the our in with

our Sustainable return potential top growth remains opportunities with attractive priority.

shareholders extent capacity consideration. rises, business will, We into course, first. are our the the we prioritizing take To of

conclusion while echoing disciplined in we improvements and expect resources. remaining In with profitability Daniel's XXXX, healthy continued growth remarks, our in and

you, hand I in that, Bryan, With things back Q&A. to

Bryan Goldberg

Instructions] order Great. respect their in [Operator people how with be in questions preference appear the Thanks, the queue the Christian. questions. for reading vote We'll to they up

XXXX was going more first to on today's Daniel, you XXXX 'XX? Anmuth an about framing. on Doug from investment was come efficiency. Spotify. is elaborate year was want XXXX And for to question monetization. XXXX

Daniel Ek

on execution. the on of is, we basically, year going I'm mean sure. it. because comes the year should be we of did disciplined We're Yes, while for is AI, of product to very about feel our really opening doing investors touch good we this. all advancements my can do able the pace because velocity. accelerated down our being up we're music going that coining dramatically in pick and remarks, to org to what this think double where to in I this it but when And And

Bryan Goldberg

All right.

Sheridan next is from capital to Our question allocation. going Eric come on

discuss thinks scope and/or how can profit rising capital management company's you about the shareholders? for potential the returns trajectory, to Given

Christian Luiga

you, Thank Eric.

the right, also on fully as side, an improved but are you're in remarks. my we said side, flow I cash seeing trajectory actually As on the profit

our if will, And as rises, message. prioritizing that potential key also that's are invest in we have to the first said, of returning first. and consideration. invest and of out remember business how can to we We shareholders this business want course, do profitability, I take through figure the year and capacity I think we our our into we And is excess actually

Bryan Goldberg

All right.

Our Relations. next going from is come Labor question to on Reif Ehrlich Jessica

provide Your perspective new deal completed with usual. may this you flexibility were Universal that recent from than benefits was Music some or the of not services? earlier Spotify's available Group this prior to how and impact Can

Daniel Ek

of bit too. this to Yes. a sort I alluded mean, little opening my remarks, I in

So we're of talk these things as about very we're double where product find year so about the excited wait to we music come. yet, on the at it. side, what I we'll out on but can't just and many very look will about you'll XXXX excited have and down And

early what that, was days in we and to piracy a environment. as of needed simple people do of a we where And been as think about was if this, But into proposition to freemium very, music do that proposition the very history a our model. company, sort maybe getting legal try really simple from to a of the we've you general most up-leveling

a subscriber. start using benefits we for using out. to if You become and you you you the like a Premium try Spotify for lot could free, were And added product it it, of paying

just like to a of we like that. the that's up our plans, Over a consumers time for Family lot other doing added modes been name to driving Student ended Duo, for a Plan, few then, growth. few, pay And you like Spotify,

I industry, these of subgroups. all going believe, the Spotify The one to to where next we're experience of version is music the of tailor different

One the super of talking which them fans. we've been about, is

with which I've I been talking it are you industry obviously those of sort guys and table. to So there's about product to we show music. super And playing fan for exciting that's that. around we're super But really some this it and time that one of I'm about But music, I'm now on and a to wait personally the about. music this it's excited one comes of to one-size-fits-all as to of the excited can't waiting things not come quite more future is bringing this when a

Bryan Goldberg

right. All

advertising. growth to going remains question Rich from Our next is disappointing. Advertising Greenfield come on

seems there revenues. engagement of not help disconnect a programmatic, understand embracing be and rather and are Spotify your size lackluster advertising brands you're momentum? your While given be the to the why on dying you to audience us Can given

Christian Luiga

first Yes, year ball. something I we moved from into It last Thank the you, is we out start performance say, Richard. on late to brand sales. recognized that we were clearly sales yes,

nothing that to So sort away is from. hiding be of

But from a to now. on little time. a that, and ball we decision actually of into programmatic the takes made move are then But bit we that

a up We largely completed. the getting to technical done have our bidding. demand now the are supply And It's also more on then to opening build-out. server, we unified on

to out platform. look add I last a the said little of Trade and be and started we we're going have quarter, now Yes, XXXX have to as going And bit but partners this stable we're As get a with transition you to this think when year, and our year is late, we will more XXXX, scale. know, onto Desk we building

have now on and time we what do happy. and we we think are know partners, when happy we're I delivering to

Bryan Goldberg

Okay.

pricing. next Amazon with price last come It price frequent a and is price question market announcing week from like more increases increases. entering on we're going Our to Patterson Justin wanting labels inflationary seems

content environment? you your how price your Given about think to and of breadth leadership, feature in do an value inflationary adjusting

Alex Norström

growth This we going about also is future really add-ons is adjustments, The X things: a our way Norstrom think existing Thanks here. subscribers. it's that ARPU tiering selling for between the forward it's price function and Justin. question, then to Alex

over this mentioned a well. our respect part And now as with before ratio to We take we've steps great has before, Daniel value-to-price something is in of specifically, to this price the balance the increases, as care is time, mentioned toolbox.

content value, it and can the size AI, we the by adding of way when of the see increased And here, of you And and comes we've add just Jam AI we playlists, value in have. do like continuously Audiobooks the it us features on. year way to is we And experiences. things number last so

in markets. XX We now have XXX,XXX Audiobooks

have We have XX catalog much the video million music. world's entire podcasts. We pretty of

And where more reward we far sticking then us as and with then more around. makes love, our subscribers price as price adjust it goes, engagement sense. And

and is we highest And so that really, the key if entertainment. of, takeaway not here subscription value loved the is believe in most, Spotify one

Bryan Goldberg

right. All

it's Another with you clearly spent that question quantify video have from Rich small TV still spent growth video's amount will time Greenfield time to video on video. be for versus Daniel, And a do a only? you a of is today. of Would important to Spotify able play the you, time? mobile but goal consumption? audio in role over long-term And with fraction

Gustav Söderström

This is that Gustav. I'll take question.

podcasts I as I mentioned becoming think are we know, offering. in important know, November So launched video This that is new very a to as And you had this where us. in you L.A. event we video.

both experience, Users on payouts, pretty importantly, model better but our And and experience to pivoted uninterrupted ads. in X also the premium an saw build markets with we where experience by receive creator Premium a so this these better a we consumer current early

And this are recently, with far. very we what we're launched we seeing just so pleased but

expectations. We're more opted this creators have podcasts for very we our which above X total that. already is And about the than eligible about is XX% this million already video offering have in, So about growing, we have of podcasts. and and happy XXX,XXX

we're seeing. with It's happy the early, engagement with So but happy very we're it. very we're very

platforms. want engagement comes all across it obviously, we engagement, maximize And always to when to

TV. and that includes we As I invest you heavily in think ubiquity know,

So years, important in we've for the very and a experience been it several part. is TV investing

Bryan Goldberg

Okay.

Gross quarter. XXXX? variability Next Benjamin this margins could question of of also, dig Could margins you Black And from the you into us in help for margins on margins. operating came above gross understand drivers expectations trajectory and here? the

Christian Luiga

for said through. quarter margin The and there cost content favorability, was mean, a said, on Ben. I was onetimer coming you, you the -- Thank gross as the impairment X we

to for we're that's it same possible. to as easy but that core at on offerings, try we just we for give you going investments to time, drivers full And X, I'm into then as And guidance on not that the you going want don't I to quarter to little the the make our have said, targeted a forward. bit make year, but we details go more we and going why, as do give plan before. a done in

That we're year. have We doing through to music the then going it invest we're come and we're also and done this the will in Audiobooks year. now video in saying

will also will come just looking the for you -- year is that that, than full to, but is that we on the think the for hold And can we you the be are in -- will the also imagine to higher give I there end the in year. we this to of quarter quarter you needs be the this be course higher year, business. that X of investment something through possibilities that than growth over be there of XXXX X. in should But this it variable some an with distortion but to kind to said year there drive And more ended for also

mention And finally, just that play in the well. I want seasonality also on to, that, as will

Okay?

Bryan Goldberg

All right.

some on to the Can to investment is the Our opportunities it from How first the future? Batya here? the ramp does to in Partner And quantify going you from your quarter are Spotify from program? you the in margins been Partner has this next creators And the expect on Program? Levi Program. monetize come question what response impact from

Daniel Ek

seen as and creators them a side. podcasters and as Program the on uptake video on are more And video coming adopting tremendous of our to we've well. very already overall more mentioned, Yes, results assume big platform the mean Gustav I now and the you Partner obviously

really we about it. good feel So

as it answer, then question, pertains don't regurgitate And the Christian last it. think to need as mentioned his I to margins, in I

feel is I think it in the which good was variability some we really the quarters. maybe it pretty one, solid about but on year,

Bryan Goldberg

right. All

next Do on were of household Spotify come Plan are of crackdown enter Recently, us, for widely to people Deepak Family sharing prompted ZIP codes. our the user from going Plans Family by plans. by somewhat question the Mathivanan opportunity in Plan? many. users, Family is Our outside to shared you see some

Alex Norström

Alex Plan just how a big that It's to It's is. constantly And here. And of Family kind innovate make see of Deepak. there to see just in Thanks, subscriber the making wild use and users right positive make and we going up base. the iterate popular our and coming the Family Plan we off proportion subscribers this changes as along, sure we're way. on are continue results we go to this. to that of

Bryan Goldberg

We've and Doug in MAU Can the got Anmuth how position another additions other factors? for about question you promotions on drivers the funnel. subscriber And net of XXXX? across Premium talk from does additions marketing, MAU, Spotify record this the

Alex Norström

Alex Doug. I'll take It's again. this,

if world. form doing and take music around that really you about it's beloved we the So in art we're a most step the believe what back -- and think here, is

podcast us. and into ahead of recent so you the the If add that just video market see Audiobooks, then enormous we our TAM this entering with books to also

of grow. for us plenty to there's So headroom

and subscriptions offering focused thing And relentlessly that most for really users strategies that are call, around the valuable happy are important is paying most report our The the we this, world. building best on I'm working. to we what

the at instance, of on the out of one take it's If the monthly compared you, look a entertainment time Spotify, for top platforms there. highest any to spent

wonderful the of love Audiobooks. combo now and just podcasts subs music, video Our

in repeating markets some million that broad-based, we're just And now the radio And geo, Spotify. record emerging worth outperformance. cars. adds, And QX with the the subscribers in only users XXXX. U.S. AM product which Spotify QX use was and We in we is in that had -- even that with in use and growth for second the net day saw moment a tied was XX it's one a really across stat U.S. interesting to progress FM leading

ratio line So is is north developed the more now; that bottom sub-to-MAU world. strong of XX% the And and roughly in here around XX%. the or is it's even the markets, funnel XX%

Bryan Goldberg

dynamics shareholder how question another got the you from Morris shifts? We or And you negative from do developing all And in Are expand long Okay. are your select markets in they these from competition. to same Can the Michael on continue? comment shifts the expect deck? positive impact competitor on competitor?

Daniel Ek

Yes.

in always being of of -- that's something That's tech not So dynamics. global with have highly and of marketplace that's competitors. really competitors the regional again, operating from of sort sometimes from case. there's news start competitive company And keeps ones. obviously competitive a lots to the this beginning platforms local We're as us, to existed we everything the

local -- to market tend tends that the quite And What happen it's fall regional they present. early stages when ones then tends as matures, is to they to away. to quite be tend be of markets,

in this we to positive away where our Spotify net marketplace. competitors so referencing one fell the specifically in And were case was of what a

competitors which, the engagement But driver of best The lots The again, focused highest this product engagement. the of course, the on driving overall, mean best the in lifetime value, is will marketplace. most product. have the most We're business. will exist of

except So here see play. nothing sort normal the to really of

Bryan Goldberg

Okay.

to education. Rich explain a Is be Can learned initially educational from Courses U.K.? Will you ads the What product about it the Next education date? question in you're that video-first audio-video have you how mix? and product? content? Greenfield thinking The in on launched there

Daniel Ek

Yes.

subscribers far is to it's passionate So educational trialing it's very program, can with in our strong the been terms say pleased we're sampling. even it the comes that when really that really a educational What personally content. but out the I'm early category have of that U.K. I millions been and There's educational people of about. early demand seen so in part developments. There's quite days

a early early us experiment days. this positive and do if is this very And bit known company very, so quite indications. while, oftentimes these for we But know are different so, a verticals. in far quite And very

with Sometimes these we pivot learnings.

down scale. we and Sometimes, double

in space, trillion And to a case. billion $X perspective that global probably somewhere is maybe investors, the that for so however, It's to put entertainment $X.X is industry quite exciting. between

look basic elementary educational remove sort million, K-X you $X or K-XX you of trillion. totality. it's $X.X global at education about it's $X.X $X the to or trillion if If or marketplace, in education, But trillion

of So knowledge entertainment an one. the is interesting space versus

as And a if most one you is about amazing not entertainment think us pure-play product, Spotify for we're a the things of platform.

We with are also a platform where time already people spend educating a lot themselves Audiobooks. with of podcasts,

education or quite and putting it's really experimenting, a improving that and natural step the early pivoting we Marketplace. So we're be you extension surprised the into days not in out products journey. keep super on But is that should if

Bryan Goldberg

Okay.

first next subscriber business. Premium your additions were question an from quarter Morris acceleration outlook first of Premium the at 'XX 'XX? exceeded to million our of XX you X adds is quarter Michael net million of to relative in on in do and significantly the the fourth Why to Our you forecast fourth quarter million slowdown X the quarter added compared XXXX.

Christian Luiga

And about an that little first out quarter. first we true. It a a said point markets, That and a bit the was usually seasonality our very We you. from into of is happy a Thank Wrapped quarter the also competitors moving overperformed. X. We usually acceleration hangover weaker. view developing reason is of did brings quarter

year -- the impact important see also for do strategy we company. growth message the most an year the product we how full still is for the marketing think I the how on year, our have course, over things. for see as But of will healthy we a that always, we and feel Then,

Bryan Goldberg

Okay.

Patterson is on question the business. also next Justin Our subscriber from

thinking in of wave margins of progress the marketing growth? in you subscriber pricing or in drive about how rest reinvesting features to adjusting next are the markets Given retention, and world

Daniel Ek

for the of midterm, I What near still company growth and for of profitability markets. very the our sort the be developed will to profitability much is say would

the the half people a that development line even the due We're emerging of saw pleased those across that really that's maybe the the engagement. I that drive even of feel lot emerging the and trying gets in some I'm But I what markets. music MAU growth That QX doing in we're of with back will about and planning twists pretty further top in the funnel. think to things year it said, is about markets. been to particularly clearly of engagement the good teams increase We the have year. in

and I these emerging case think And profitability revenue big music company both everyone a be we be for when questioning how very And could the always believe for both strong this were driver America now some conversion realizes market markets, And been of too. people where additive industry the and very it the it's the meaningful that from engagement, have can to days a and for subscriber strong certainly correlates and early typically case holistically. will then I the that growth. with Latin has market be, big I

want too. note also additions that a to did markets, from positive emerging I we net see in trend on subscriber QX,

front. we developed profitability Spotify the -- expectations, more businesses emerging But So I to time are markets feel markets. India long that to set But be growth to just should of deliver. making will from come substantial there's that -- we than that on and think will over you others very rather confident term expect places progress that like

Bryan Goldberg

as while Ben expect Swinburne margins? your time music ability the Should How this agreement? question time a label of diversify from your we with does Okay. Universal "Streaming improving music calculated result at service over drive your impact new changes beyond Music same to continue We've to to on Group how any agreement a relations. are got your royalties X.X"

Daniel Ek

something. add maybe to wants and Christian start, I'll Well,

most is us often they So hear first from dynamic and believe foremost, misconception the that there labels. I think win/lose one a is that quite the common I analysts of that and between

and this at meaningful as the Spotify dynamic. our profit years want We this. looked we very for everything to not margins look starting a core, is always you ago, company it we've at this if scale, XX to how since Ever from there. get simplify that's our goes win-win And if

focused did I company, the were profitability. all XX first, We we was scale. really, So say, about driving of the years on worry meaningful would not

not why have great a product, me but great And you a that's necessarily say so heard we business.

Like Through the more business, now of cost platform a I reductions, but that proving then operating now that also really we're too. great we're scale comes we're scale that year begets businesses, monetization, through much think more from at. that And profitability. added of most

So simplest say can the at that's what I term.

with sets that not believe and on this, label nicely, this that's As our we're what specifics the very will and partners our us the any we if the we And of we to from comment very win-win. call negotiations growing growth. ecosystem up say too, strong than benefit will usual, for deal other

Bryan Goldberg

Greenfield have a from since made changes belt got your here starting differentiates Spotify, now for question a Spotify's months you've at under culture? what either there any Christian. And structurally Having philosophically? We've or few Rich been meaningful

Christian Luiga

interesting I changes, that early a Thank for there's what you. see it me. but this I couple meaningful and would Maybe is is what things. about thinking different course, That quite an I've actually done is, it's question ask if say in of end coming would I'll feel days. company the in to into Daniel that that I it it culture strong makes this of is company, and that that say some

company. the One into that to is that get when and technology on how focus you platform And is very value feel company. the the you through strong the in create

thing The focused on a focus that is is other company. very it

can then come I experience, over difference an time. sure with my on how now. So on are get we we That's that want comes explain to my make the through it and think of we the can we colleagues and how to very we try I this put have, trying with whatever where and myself, focused we focused do those -- and easy I stay proof to way in is it work right colleagues do, make to work important actually is my and and scalability work company to also trying we tried structure my comes our important I'm points also to structure have maybe which to I'm help the the how then what thinking it's make feels leadership -- in it's and improve and fun a about, is how company That's where my be us it I'm here. When scalability. own like. to also thinking focus when here, that can is that about my And

Anything to my... Daniel, add, on

Daniel Ek

the Spotify's main that and culture tie I suit And in T-shirt Christian now think coming see evident is so up. from in see every thing loving sitting from culture, on as he's we're to he to showing day. people a can used have difference in

Bryan Goldberg

from question discuss Can in company's Eric about growth the deeper building advertising. a XXXX? we think on We've blocks into to the you business Sheridan how got progress for as advertising

accelerate video possibility? the around And how ads creator efforts might inventory

Alex Norström

it's what growing. advertising question growing It's if question, to it's of Great trillion really the that trillion the from supply and think you just in will know that Eric. is, demand. And and about $X the $X number decade. market, a it's I how some grow don't clear say just meets growing next it

is on look inventory about before treated supply generally and and sales this it's tier, think demand. Spotify, if which unique high, sticky. just we've -- our you how you the so And the supply a free have very direct we on used at we've audio very engagement, of to And distinct if meet pretty side,

are implement is And be the ever-increasing for supply the and programmatic. And so that going demand the to saying, now we're meet hey, just our we're going idea automation difference and that simply to open have business with there. out now we is from to that's before

As very able meet. grows, the more the goes, video more the be to demand more And video obviously that and far we we will format and inventory supply attractive. very as will have potent a is it's

Bryan Goldberg

All right.

expected from new Our margins. in a Universal margins Creutz deal on first sequential driving next What's decline the comes Doug question quarter is your in factor? XXXX? And of gross the with

Christian Luiga

sales Ad usually on in a weaker margin Well, X, be quarter to of think weaker point and go it in But going part. seasonality. always lower main will I'm quarter, driver bit is gross not the X UMG details first therefore, little the all, and is I quarter to a that is the quarter.

of any going what others. into that's But of made margin. will top in course, and that, also on we And investments I'm without say. details, have impact to going several video this, But

Bryan Goldberg

related margins. of from on sort And question got a Zgutowicz a we've Mark

expense XXXX? be Now that can podcast trajectory should thinking when podcast expect is how breakeven exiting And about on gross we accretion? profit, we

Christian Luiga

Well, as then perspective you in of profitability that video. investments the podcast. moved a essentially into on say, point we have forward break-even do we also But now going into

it that us create also as returns believe customers We should have disciplined targeted would and healthy like gives impact bit that margin we future investment see over our an can for value the with we time, take but on you there. So Audiobooks. a investments little

Bryan Goldberg

Okay.

question Ripps. for technologically, podcast podcast about And it episode? in ads non-skippable ads versus the between Our I Maria and would the thinking implement most to onerous skippable trade-offs monetization experience from be user Spotify served relative premium was is next how the potential? users, are non-skippable given including ads

Gustav Söderström

I'll Maria, here. this is that. Gustav answer

for at announced way in is precisely event this. the is to now November. offering And it this the videos, think So what we that about L.A. we are

as without We was And dynamic are say, monetization. there we you podcasts, have offering ad interruptions. what podcasts, solve to the video

out So these that they instead not podcasts paying creators we these to less money. video making are so for are

In more. or same fact, the making they're

yet. doing for right We're audio now. So video podcasts doing it we're not that podcasts for

work technical reasons, exist in For cetera. There's that something dynamic video, in stacks. insertion podcasts ad really called they the et ad doesn't differently,

doing this at So we're for No the plans for right now. audio video moment.

Bryan Goldberg

Right.

benefits lower perspective over at invest need general on business from it is you artificial can long Or benefit to might and your has term? DeepSeek Spotify's share sooner accrued be shown how Ben the cost? you opportunity? to Can the this Do Our next and Swinburne. intelligence meaningfully capture question

Gustav Söderström

Ben, that. is thanks appreciate question. for the This Gustav. I

or ASI, AI else, it as about any great drives but Spotify So for for assistance, and writing is, AGI quickly, to One areas code, artificial we're in is as productivity think very when comes both adopting in seeing et cetera, superintelligence, -- also company, X and aggressively us. that coding everyone productivity And general. how really to other just tech increases.

So that's one benefit of AI.

maybe talked moderation haven't The we other one costs. is about so much actually that

something Spotify do Previously, for company So cost only are comments, lot launch podcasts moderation AI. that you've people were we get a that successful a on of is can the for We of because This very of just example, like seen commenting. prohibitive us. us. for

great for a boon So us. that's been

more user then the one of third for the we've experience. of And impacts. generation time, this actually obvious been user in important the know a even long thing biggest is doing they experience Maybe benefit is the which obviously the new it's area most actually recommendations AI. to recommendations, though that from even And is the

today. it But DJ, there that and and the that pretty cetera, unit level more. models are evidence is as it AI it want DeepSeek, open that, also intelligence to Playlist, see this AI at dollar these comes industry new experiences cost per think if drop intelligence, about forecasted to in et like commoditized further and of AI rapidly we getting sort the meaning general dropping you prudent sourced the we in fast, that to investing keeps and think like And when AI are we of a large even

continue of we're feel do at right position level investing to good and now we our very We and So spend. our level prudent at we'll look that. a

Bryan Goldberg

or Richard question premium super for finally elasticity Kramer any you We've got you when pay launch sort you from consider of portion price base, further your sense a Premium expect one? What Do right. the you HiFi of business. on the of have a a do price might All if hikes? tier now fans which

Alex Norström

here. Alex

of really discussed where markets from in part And was with what price adjustments seen line it other do As with we and and so prices we before, we've in raised churn QX, our low in this in toolkit previous continuously. before. now is increases quarter

do talk to premium we've Daniel own have million are on. super a XXX about and share products people as interested more working excited but super is interested you, as we told primarily scale currently. who there that on, to them I'm ask research and and in in from can our And nothing HiFi what subscribers, tier fans And as to to scaled And as what also I we you super product more like something this the that now that users is tell additions and far we're more we and so goes, and that obviously, tier.

Bryan Goldberg

et Okay. about of Kannan We've pricing got Venkateshwar Family, access potential by tiering degree Premium. a Could cetera? content like also question the Duo, for you from of talk instead on

a for, And is providers tier? your podcast flexibility there under agreements say, content with

Daniel Ek

from this of base hundreds are one-size-fits-all already as that millions. the I this tier to specialized some of of the more Well, of sort mean, moving Alex this much upon touched we're into growing sort of consumers

more answer Spotify would think this say I to what to base-strong you I XXX subsegments can't in so I all is general future And many there while specifics, versions in that million that expect consumer be the the now adapt of of the base. will should various

new of your about more excited of very for we're needs. yes, so And entering era into sort Spotify that tailored

Bryan Goldberg

consistent? is the Right. Mark Mahaney Can Has Marketplace? growth Looks provide Marketplace. got from on more a any couple you questions. for remained X-sided on like next We've update time one

Christian Luiga

visible. our was adoption see similar And Marketplace XXXX important the also our the to XXXX. the thing year expansion and The think is that And good. of is Yes, and growing And very the types, -- you. I double-digit the continue expect that growth all the Thank is higher performance. product into then contributed do customer healthy roughly of initiative to to MAU engagement another from will we inventory XXXX. full year strong we continue across

Bryan Goldberg

What question XXXX? learn on customer Okay. from might another the this side. LLM Google in how using amend you product We've the ] reaction? got What Notebook from Kramer [ And Richard Wrapped? did for NotebookLM the you (sic) was

be is with finally, realized R&D approximately efficiency million then XXXX, more in to $XXX expenses And there XXXX? in down

Gustav Söderström

Gustav Richard. here. Yes. Thanks,

by So this you a was ever by where about did And personalized start yes, users of year. very appreciated built a users. Wrapped, and your data and the first It's if with deeply we podcast unique we Google about first-of-its-kind took NotebookLM and the build actually we deeply sort experience. story

We kind up. So we that love We knew step just one personalized of users further it that learned this things. our learned was through X taking and Wrapped leveling already, storytelling.

us to cutting-edge there's for very People this? of products important but presents you opportunity Well, that's to us be product the the for think It's be very a be building overhang trying capability, great builds others. sort is also products. that products. of the company always that no at see And why these doing a innovating the this. want that are those want the We at in AI-based of why things before This we is We AI talk best products. yet. company world one and to the building we

for one a And about doing day, very do this one it's learned single is scale. user on Obviously, good this because at how on lot this we're of we to a a hundreds to for millions different they even that haven't already we at something before. that very Google with scale relationship hosted a do leverage But GCP. done challenge. had thing, We

learned learned lot like. tricky scale. still about experience but build is We how which you what a safe We at scalable in about a doing users a always lot it way, when this you're

personalized deeply was of something in this the is see great had of It learning fun. in us So future experience. more lot products. that terms a do will you a of AI We

Daniel Ek

finish? when was it X did I'd maybe us, start months from we what it to it, took add,

Gustav Söderström

less that actually. was than it

we about before to it it. launched X up think we with came X I weeks

Daniel Ek

Yes.

why So pretty which target we accelerated think is gives for the things which year. fast, I XXXX we of the also a we in lot that okay. for execution did us well, confidence can Well, speed up set as

Bryan Goldberg

Great.

Gustav, faster is Our on on team last XXXX is seems Justin ever product on innovation. topic it a product the Patterson related from to your come than since question reorganization. going today like innovating

evolving XXXX, of you from feature and thinking product are launches about look you As the to here? how pace the

Gustav Söderström

appreciate I confidence. of Justin. that vote Thanks,

this about it way. thinking are We

in reporting to direct don't company I more. which The and last So as years, is very the have way, a we actually running X Alex speed teams. speeding up up fairly unique and are mentioned, We intend our Daniel we own have synchronized. even been

represents together about the it's single Spotify, people. called is a team run that have eTeam, who people which We XX really the

And to the Alex bets list what company the Senior bets. called something next the X within these the then X months. company, something increments in It's I we people I their the ideas and board. achieve Alex in do ranked what of pitch and of prioritize is we for work called company months. want stack into a

seeing this They months back, for company the Then we're committing do. about they to we to And X send then company spend this, out can to to X working what commits plan. coming weeks this. heads this the and down on list X

has company because there. up, everyone This People they're efficient It reasons want one why means don't in the view gain proven that what clear. has priorities do. the to is we the us. for is more speeding same over to we're and we be fight of And very to of think it this have crystal we

Bryan Goldberg

Q&A session our Daniel for remarks. concludes that to call Well, some for today. to the Great. turn like back I'd over closing

Daniel Ek

All experience, you that sustainably both drive we impact, deliver where feel right. but good grow increasing place to we a Well, too, are, we this feel achieved it, after best speed And enable world. as to will combination a session, I'm the and very, this efficiency will continue hopefully, too, it's you and about think that guys, and really valuable long-term very year. Q&A us excited as user bets And business. last and to maintaining most levels really creativity we XXXX. build I the And product while I our will of the think about

again So thanks for joining, everyone.

Bryan Goldberg

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

Operator

and Fourth Thank you concludes Call XXXX Quarter Earnings your Spotify's for Webcast. This participation.

now disconnect. may You

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