Well, I mean, again, we have what I think is a pretty decent music discovery already, which works pretty well. So we've seen really strong trends in general across all of podcasting. Read our Ideas Made to Matter. So inevitably, you should expect our hurdle rate for new investments to be higher. And we also made tremendous strides in setting Spotify Park from everyone else in our space. We've grown from 100 million users to almost 400 million users over a six-year period of time, Vogel said. So that's our general approach. As such, we expect another quarter of decelerating growth in Q4, but we continue to remain confident in the long-term potential of the [ad-supported] business. You may now disconnect. This is according to plan. All right. Moving to premium. Spotify's Q4 guidance for MAUs and premium subscribers was strong, forecasting 479m MAUs (+5% QoQ; +18% YoY) and 202m premium subscribers (+4% QoQ; +12% YoY). 2023 marks a new chapter for us, but our commitment to achieving our goals remains the same. Spotify announced its second-quarter So, could you break out -- break down which investments are falling off that will drive the positive gross margin inflection in 2023 and 2024? But as I mentioned before, we're thinking obviously how we can grow our business the best possible way. And I'll let Paul fill in on more of the specific details. When Vogel joined Spotify in 2016, there were 1,500 employees. four years ago, we entered into podcasting. We -- so are looking closely at open headcount to see which of those we want to backfill and which of those we will also eliminate sort of, as we've mentioned a number of times as we try and be more efficient with deploying capital and employees moving forward. And we took the medium and pretty much have grown overall globally now the audience by a huge margin to what was true four years ago. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. If you need more lookups, subscriptions start at $39 USD/month. [Operator Instructions] As a reminder, this conference call is being recorded. We want to have a billion users, Paul Vogel, Spotifys chief financial officer, told attendees at the 19th annual MIT Sloan CFO Summit last month. And the second strategy would be to increase the revenue per user that we already have on the platform. And that adds several benefits to Spotify. So, it's definitely something that we're doing, and we're looking at it as a balanced portfolio approach where in some markets, we're selectively increasing prices because we're in a more mature place. Now there are more than 6,000. Okay. - Spotify CFO Paul Vogel, Q3 2022 Earnings Call. Moving to operating expenses. As the Chief Financial Officer of Spotify Technology S.A, the total compensation of Mr Vogel at Spotify Technology S.A is Admittedly, those were lowered expectations. Spotify Technology S.A. has released its financial results for the first quarter of 2023 by posting an update on its Investor website. The one addition I would probably just make is that it's generally been true over the entire existence at Spotify that the longer a person stays with us, the higher the likelihood is that they'll end up being a Premium subscriber over time. So generally, our approach when we're early in a market is to try to grow the number of participants on the platform. I think what we said in my outset is we expect really strong growth. Obviously, on the MAU side, '22 was a real outlier in terms of how much we outperformed. And while it was really great to close out 2022 on such a high note, the fourth quarter is -- I think we just really one of many proof points that shows that the investments we made over the last few years are really paying dividends. Such investments have continued (or even accelerated in the case of Meta Platforms) despite substantial public pressure from investors/analysts to cut costs. It's always tough to know. Universal CEO recently called for a change to the streaming music business model, citing an increase in lower quality content, diverting economics away from artists. Despite Spotify's market leadership position and immense scale with 456m MAUs, they have struggled to generate consistent operating profits. And some of it, we have to absorb the cost as we're testing. And over time, that will translate into business opportunities for Spotify as well. WebPaul Vogel. But again, given the outperformance in MAU this year, that's always a good harbinger for sub growth in the future. Thank you. I wrote this article myself, and it expresses my own opinions. We had strength, family plan and Duo plan. Long term, I think it's absolutely a business model and market opportunity for Spotify, too. We want to be the No. So, no specific guidance, but yes, there was a big ramp in 2022. So pretty consistent with what we've said in the past in terms of what the impacts were in 2022 and how that will change in '23 and beyond. I think we had said at the Investor Day that we expected Marketplace to grow at least 30% in 2022. And I think you'll see us be more efficient with our marketing spend into '23. In Q3, Spotify reported 20% YoY growth in total MAUs from 381m to 456m (vs. guidance of 450m) and 13% YoY growth in premium subscribers from 172m to 195m (vs. guidance of 194m). I would just add in terms of just the subs outperformance in Q4, it was pretty broad-based. So that's going to be a net positive as more and more of the revenue starts shifting to those categories. It is also so that from a competitive lens, when we've added this content, what we're seeing is that consumers are not just consuming music on the platform, but they're consuming music and podcast to a great extent. But more importantly, for our share owners, I fully expect that they will continue to pay dividends in the months and years to come. Yes. All participants are now in a listen-only mode. So, it's tough to really know. WebIn a equity funding round in 2015, Spotify was valued at $8.5 billion. We feel really good about some of the acquisitions we've made, obviously, at the high-level megaphone, but chartable and pod sites and our ability to improve measurement and attribution across all of advertising. Concerningly, Spotify's CFO Paul Vogel expects the slowdown in ad-supported revenue to continue next quarter: On the advertising front, we are seeing some modest improvement from where we were a month or two ago, but the macro environment still has a reasonable amount of uncertainty. And as I mentioned in my opening remarks, -- some of these things we expected to take longer on seeing the benefits, but we're seeing them already in 2022, and I think that's a real positive news for the years to come. We're going to continue to see Marketplace growth, which will help our music gross margin. Entering text into the input field will update the search result below. It expects to add another 15 million monthly active users and 7 million net new paid subscribers. But again, I think we believe we'll get the benefits of some of those moving forward into 2023, and you'll see the incremental investment slow and the benefits kind of hit in '23. I would now like to turn the call over to Bryan Goldberg, Head of Investor Relations. Search Others Named Paul Vogel Paul Vogel And as a result, now we have 5 million creators on Spotify, so a massive increase in the number of people who are creating podcasts, you being one of them. spotify usa inc. I am not receiving compensation for it (other than from Seeking Alpha). Good morning, and welcome to Spotify's Fourth Quarter 2022 Earnings Conference Call and Webcast. LeBron James is about to face Stephen Curry in the postseason for the sixth time. Okay. So, nothing has really changed when we look at the space and what the potential is, and now we're just heads down focused on executing. Actual results could materially differ because of factors discussed on today's call, in our letter to shareholders and in filings with the Securities and Exchange Commission. But I think the most important thing to perhaps note is that much like platforms and media, one of the most interesting changes that's been happening is obviously, that people's music taste is becoming more personalized. Here are the highest-paid members of the mayors team, followed by the rest of his Cabinet (in alphabetical order): *Policy Director Kaohly Her won election to the Minnesota House in November. We had a plan and a focus at the beginning of the year to really invest, particularly in some of our newer markets to grow there and make sure that we have the foothold that we wanted to have. Such R&D costs should naturally decrease once Spotify's recently launched products become more established and the heavy upfront product-related investments are complete. So, we expect that to improve and improve throughout the year. If for some reason you don't have access to Slido, you can e-mail Investor Relations at ir@spotify.com, and we'll add in your question. Thanks, Daniel, and thanks, everyone, for joining us. So, we do expect that Q1 will be the low point for gross margin, and we do expect for it to improve throughout the year, with hopefully a nice trajectory heading out of 2023. So, we wanted to tackle this heads on. And so, when we talk about an investment year, some of that is part of what was going on. Next quarter is unlikely to change anything material about the "stock story" for Spotify, but I'll be closely watching management's guidance for 2023 margins. Spotifys foray into podcasting with its purchases of Gimlet and Anchor was a bit risky at the time but is now paying off, given that theres been so little innovation in podcasting, Vogel said. I think you classified 2022 as an investment year. It's time for Spotify management to begin to "walk the walk" rather than "talk the talk". We're fully aware of what's going on globally. So, marketing was under Alex preview previously, but not advertising and not content. What are some of the puts and takes here? This was 10 million ahead of guidance, up 33 million quarter-over-quarter and the largest Q4 net additions in our history. This was a weak quarter for Spotify's revenue growth, which was masked by significant currency tailwinds. You're seeing a lot of Polish music being very impactful as well. It adds the benefit that it makes our business more defensible because now it is meaningfully contributing to our advertising story. Today, the book market is worth $140 billion with audiobooks just a small fraction of that, he noted. Exactly when we break even, we haven't said yet, but we feel like we're on a good path, and we feel like we are in a good position right now to have that speed and efficiency that we want to have in 2023. Spotifys journey to finding a successful model is applicable for digital companies today that are trying to grow their customer base through subscriptions. Kolekcja Symbols toukon wstron pierwotnej symboliki ijej znaczenia dla czowieka. This remains consistent with the plan we outlined at Investor Day, but you should expect us to execute on it with even greater intensity given what I just said. However, again, the primary reason why we did this reorg was to drive speed and drive more efficiency. And now we're going to have to live up to that. Reported results were aided by a 600-basis point currency benefit. And of course, the better the engaging experience, we make the more likely they are to stay. For the last four years, hes We feel good about the guidance for Q1 and how we're trending. So, for instance, if you look at many of the local geographies now, you're seeing a lot of take France as an example, you're seeing a lot of French music actually being very impactful in Poland. That being said, is there a rough time line with regards to when we should expect overall operating income to reach breakeven? So, we expect that to be pretty significant. Now it's perhaps YouTube and TikTok, et cetera. We want to be the Spotify has struggled to gain traction in the public markets, falling 44% from their IPO price in April 2018 and 66% in 2022 alone. They -- if Spotify does well in the market, it generally increases the revenues for the labels as well. There was outperformance in pretty much every region. Gross margins continue to be the "Achilles' heel" for Spotify and came in at 24.7%, well below their internal guidance. We're going to go to the next one from Benjamin Black on margins. And now we're holistically looking at it as one P&L and focus on driving efficiency across the board by readdressing resources to where it's most needed. While bears can criticise Spotify's lack of gross margin expansion since IPO, it is difficult to criticise their user growth or engagement, which has increased like clockwork each quarter. With respect to first quarter guidance, we continue to see strong momentum in MAU and anticipate reaching half a billion users by the end of Q1. We want to have a billion users, Paul Vogel, Spotifys chief financial officer, told attendees at the 19 th annual MIT Sloan CFO Summit last month. Essentially, Spotify is a lot more complex of a business than it was several years ago. Overall, Spotify management expect margins to improve from 2023 onwards, which provides some comfort for investors. Please disable your ad-blocker and refresh. As of Q3 2022, Spotify had 4.7m podcasts on their platform, up 47% from 3.2m as of Q3 2021. How is this thing going to win podcasting these many years ago when we announced that and yet now four years later, we're the leader in that space. Excellent user growth that beat guidance, strong headline revenue growth (with some weakness under the surface for their ad business when considering currency fluctuations), but plateauing gross margins and widening operating losses. Overall, Q3 involved more of the same for Spotify. How did you track versus expectations? The important part is what's pretty amazing with our Spotify story is that this is something that creates win-wins with our label partners too. It is opening up the platform so that creators have as much choice as possible in choosing whatever options they want to do. Our next question is going to come from Michael Morris on music economics. And we saw a tremendous uptake in the number of people who are visiting the Concerts tab on Spotify in 2022. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. This is for Daniel. So again, country mix changes, maturity of those market changes and so on. I think we've talked about a lot of them. Sometimes that is keeping the price low and grow the number of users on the platform. So, to put things in context, in 2022, we increased our price point in more than 40 markets around the world. Earn your MBA and SM in engineering with this transformative two-year program. And the other change is that unlike in the early areas of streaming, we're seeing a notable increase in local repertoire. And that's the plan we're tracking consistently against. And while it's too early to provide any guidance with respect to 2023, we do expect our profitability rates to improve relative to 2022 as we grow revenue, lap certain investments and deploy capital more efficiently. WebHi All, recently got an offer from Spotify for a senior program manager role based in London. Given many of the adjustments we made at the start of 2023, including our decision to reduce our workforce by 6%, we see our operating expenses growing slower with a material improvement in our operating loss compared with 2022. Spotify is the largest global audio streaming platform with 456m MAUs. And we had success with our holiday campaign, which we do every December and Wrapped was a huge success as well, sort of driving traffic to Spotify. Importantly, Spotify Sienkiewicza 82/84 Next question comes from Mario Lu on operating income. While Spotify's lack of consistent operating profitability is undeniably frustrating, I am not overly concerned for the following reasons: First, Spotify is in no danger of a capital raising with consistent positive free cash flow and a fortress balance sheet consisting of 3.7b cash, cash equivalents, and short-term investments. When combined with our increased focus on speed and efficiency, we are confident in our ability to continue our double-digit top line trajectory in conjunction with improvements in profitability. So, I just wanted to add that context that, that's still very much on the top line for us that you should expect music to be meaningfully improving with things like Marketplace playing an important role. Seeking Alpha's Disclosure: Past performance is no guarantee of future results. But going forward, we will do it with an intense focus on efficiency, and that marks a pretty big shift in how we will act. I'll just once again want to reiterate my confidence in the business now as we're entering the next phase. It's things that we think are going to drive -- improve engagement, improve users, improve subscribers. So overall, the overall subs performance was pretty broad based. It's more around increasing the speed of decision-making and increasing the focus on efficiency across the board because the next era of Spotify is one where we're adding speed plus efficiency, not just focused on speed or growth at all costs. Tworzymy klasyczne projekty zezota ioryginalne wzory zmateriaw alternatywnych. In short, the main bear case for Spotify has always been that while it may be a good "product", it is not a good "business" or "investment". CEO Daniel Ek and CFO Paul Vogel Break Down Q2 Earnings in Latest Episode of Spotify: For the Record. All right. Well, we've been making many investments. Analysts can ask questions directly into Slido, and all participants can then vote on the questions they find the most relevant. Inventive. And then last point I would just add is to say that structurally, as the revenue mix shifts to more and more non-music content, so both podcasting but also audiobooks, et cetera, those gross margins in those categories is going to be significantly higher than the ones we've had in the music business, too. I would say, first thing is I think you can expect to see a meaningful improvement in the operating loss in '23 relative to '22. But I feel, candidly, that -- we're in a better position competitively than we've been in many, many years. So, what does that mean future? Paul Vogel So, the short answer is yes. Growth in the quarter was lower than forecast due mainly to currency movements and to a lesser degree, lower marketing spending. And that is a big shift, but it is also what we said during the Investor Day in June. Investors remain skeptical that podcasting is a good business and that it has meaningfully moved the needle for Spotify. And we've seen that time and time again that this close partnership generates material benefits for both companies over time. Yes. And as that happening, it is impacting our business. A special opportunity for partner and affiliate schools only. But we see this often where we have some years where we over-index on MAU or we over index on subs, and it can change even throughout the year in terms of how we're trending. And I think you're seeing a little bit of both happening in the music industry at present moment. 2021 MIT Platform Report: new markets, green energy, Considering a platform strategy? Like I said, we slightly outperformed in Q4, and we'll see how the year unfolds. You had expectations for approximately EUR 200 million in Marketplace revenue for 2022. Our user and subscriber numbers continue to climb, showing the value of our investments in the platform over the past few years. And can you talk about the key drivers? All right. I still believe it was the right call to invest, and I would do it again. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. It's hard for people to understand when they're looking at us because it looks like it's an inferior product or an inferior strategy. So, it was pretty broad-based. We finished the quarter with 205 million subscribers, 3 million ahead of guidance, thanks to broad-based strength across several regions, particularly Latin America. Spotify (NYSE:SPOT) is the largest global audio streaming platform with 456m monthly active users (MAUs) and 195m premium subscribers. Okay. So, I'd say, look, at a high level, we've said this repeatedly for a while, any time you're seeing accelerating growth in MAU, that always tends to be very good for our business and lead to subscribers over time. So, we would always look at what's net beneficial to our business in growing the revenue and growing the profitability in each market we're in. If not, does this give Spotify increased confidence to take price? Dane s lub mog by przetwarzane w celach oraz na podstawach wskazanych szczegowo w polityce prywatnoci. We'll start with opening comments from Daniel and Paul and afterwards, we'll be happy to answer your questions. ul. [Operator Instructions]. As Daniel mentioned, we are entering a new area with even more focus. "We want to make our platform the de facto platform for podcasts for Spotify users," Spotify's CFO Paul Vogel said on an investor call. All right. So, by the end of the year, we had more than 100 million tracks on our platform and more than 5 million podcasts and more than 300,000 audio books being enjoyed by almost 0.5 billion listeners. A full-time MBA program for mid-career leaders eager to dedicate one year of discovery for a lifetime of impact. I wrote this article myself, and it expresses my own opinions. Vogel had no idea where Spotify was headed that day it went public, but he hoped it was somewhere exciting. Related Articles After six decades of arts education, founder of St. Paul It is actually making real sort of material decision-making at the top. Yes, the podcast reaching breakeven within several years. Looking ahead, we are pleased with our momentum into 2023. Okay. But we feel pretty good about the improvements we made in the platform already. Recent estimates show that HBO Max and HBO combined have more than 40 million subscribers whereas Netflix has more than 200 million subscribers. We feel really good about the ad stack we're building. And with that, I'll hand it over to Paul to go deeper into the numbers, and then Bryan will open it up to the Q&A. We're seeing some encouraging signs. [Operator Instructions] And our first question today is going to come from Matt Thornton on subscribers and pricing. Fourth, Daniel Ek acknowledged in the Q3 earnings call that the hurdle rate for new investments would increase going forward, so we should expect to see spending moderate in 2023: But I also want to reiterate that we're keenly aware that this is an uncertain time and the cost of capital has increased. How this CEO followed her curiosity to success, AI-boosted resumes increase the chance of being hired, Intel CEO on bringing chip manufacturing back to US. All right. To that end, Spotify continues to invest in its advertising business. Thanks, operator, and welcome to Spotify's Fourth Quarter 2022 Earnings Conference Call. Overall, Q4 guidance implies more of the same for Spotify. It's still early days. Total Q3 revenue was 3.04b, which was up 6% QoQ and 21% YoY, but in FX neutral terms, total revenue only grew 12% YoY, Spotify's slowest rate of revenue growth in several years. Second, in a weakening macroeconomic environment, digital advertising costs generally decrease, which should theoretically lower Spotify's customer acquisition costs. Sometimes it is increasing the revenue per user. Spotify trades at its lowest EV/revenue multiple since its IPO in 2018, reflecting investor scepticism around its business model. Not the Paul Vogel you were looking for? And we broke out the various verticals where you would see that music have been making steady improvements, but obviously, our podcasting business had been a drag to our gross margin profile. User growth was very strong in the quarter. And that will be a big improvement from prior org setups. The company invests heavily in research and development to improve that playlist experience an investment it hopes will deliver advantage in a highly competitive market. So, when you look at the core behavior, it may take longer in some developing markets than it does in mature markets, et cetera. Paul Vogel, Spotfiy CFO, joins Closing Bell to discuss. And by all accounts, it was extremely successful, if not more successful than we even thought. Indeed, Ek's central thesis for heavily investing to build a multi-product platform is that newer products (e.g., podcasts and audiobooks) do not have the same artificial gross margin constraints as their premium music revenue. Mam prawo cofnicia zgody w dowolnym momencie bez wpywu na zgodno z prawem przetwarzania, ktrego dokonano na podstawie zgody przed jej cofniciem. And you're right to point out that TikTok obviously, is a formidable competitor, I think, to any platform in the world today, no matter what field you're operating in. Its limited literally to imagination and how big you think it could be., Read next:Digital transformation after the pandemic. So, it's early days, but positive. Smart. And then we're going to holistically now look at the business rather than looking at things bit by bit. Thanks, Rich. And then you need to balance that, obviously, with having the ability to have sustainable artist careers on the back of that, too. However, such a slowdown in ad-supported revenue is not isolated to Spotify but is rather a function of weakening You need to give people a reason to come to your service when the default service is going to be the easier option, all things being equal., Spotify, for example, recently launched a feature that allows users to see the lyrics to the songs theyre listening to. Spotify, in a recent British regulatory filing, appointed Paul Vogel as a director, in anticipation of him replacing Barry McCarthy as the companys CFO early next year. And if anything, thanks to our position in users and subs, this should allow us to both increase revenue per user over time as well as improve our stickiness with consumers even more. Third, Spotify is currently in the midst of an "investment supercycle" with high R&D spend to build out new products (e.g., ad marketplace, live audio, podcasts, audiobooks), which should theoretically result in a better customer experience, leading to lower churn and higher pricing power. We look at all the trends, and we try and understand how big these things could go. Noting continued growth in the smartphone market, Vogel said it was reasonable to assume that streaming will continue to grow as well. It was definitely a driver of the outperformance in MAU and very intentional. All right. One of those strategies would be to grow the number of people that we can attract to join our platform. And we're going to take the last question from Rich Greenfield on competition. In 2021, we said that 2022 would be an investment year, and it was. However, such a slowdown in ad-supported revenue is not isolated to Spotify but is rather a function of weakening macroeconomic conditions. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. I'm from Doug Anmuth on subscribers. Please. So, what you probably have seen is one of those experiments. Dane osobowe w sklepie internetowym przetwarzane s zgodnie z polityk prywatnoci. And even within that, we had two months that outperformed and one month that underperformed. I think we've done pretty well. Given this predominant bear narrative, Spotify's gross margin is arguably their most anticipated financial metric when they report quarterly results. Our next question is going to come from Justin Patterson. How would you think about 2023 net adds for MAUs and premium subscribers relative to your performance in '22? We've got another question from Doug Anmuth on marketing. However, a notable call out in the quarter was our eighth annual Wrapped campaign, which was a big contributor to our Q4 success, and we broke all sorts of records and reached several all-time highs with an increase of over 30% in user engagements.

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