Slide 1: Q3 2023 Update
Q3 2023 Update October 24th, 2023 1
Slide 2: Table of Contents
Executive Summary p.03 Key Highlights p.04 Financial Summary p.06 Table of MAUs & Subscribers p.13 Contents Product & Platform p.16 Outlook p.21 Financial Statements p.24 2 2
Slide 3: Executive Summary
Executive Summary The business delivered strong results in Q3, as all of our USER & FINANCIAL SUMMARY Q3 2022 Q2 2023 Q3 2023 Y/Y Q/Q KPIs exceeded guidance. Our MAU performance USERS (M) remained solid, with net additions of 23 million surpassing Total Monthly Active Users ("MAUs") 456 551 574 26%
Slide 4: Key Highlights
Key Highlights Second largest Q3 for MAU Accelerating constant Unveiled new personalized net additions with continued currency* Revenue growth experiences for users and Subscriber outperformance with return to Profitability tools for creators ● MAUs grew 26% Y/Y to 574 million, ● Total Revenue grew
Slide 5: Key Highlights: Actuals vs. Guidance
Key Highlights: Actuals vs. Guidance Results Q3 2023 Actuals Guidance Monthly Active Users (M) Above 574 572 Users Premium Subscribers (M) Above 226 224 Results Q3 2023 Actuals Guidance Total Revenue (€B) Above €3.4 €3.3 Financials Gross Margin Above 26.4% 26.0% Operating (Loss)/Income (€M) Above €3
Slide 6: Financial Summary
FINANCIAL SUMMARY 6
Slide 7: Financial Summary
Financial Summary USER, FINANCIAL & LIQUIDITY SUMMARY Q3 2022 Q4 2022 Q1 2023 Q2 2023 Q3 2023 Y/Y Y/Y FXN* USERS (M) Total Monthly Active Users ("MAUs") 456 489 515 551 574 26% -- Premium Subscribers 195 205 210 220 226 16% -- Ad-Supported MAUs 273 295 317 343 361 32% -- FINANCIALS (€M) Premium 2,65
Slide 8: Financial Summary
Financial Summary Revenue Revenue of €3,357 million grew 11% Y/Y in Q3 (or 17% Y/Y constant currency*), reflecting: ● Premium Revenue growth of 10% Y/Y (or 16% Y/Y constant currency*), led by subscriber gains and the early effects of price increases; and ● Ad-Supported Revenue growth of 16% Y/Y (or
Slide 9: Revenue
Revenue Premium growth led by subscribers and pricing Premium Revenue grew 10% Y/Y to €2,910 million (or 16% Y/Y constant currency*), reflecting subscriber growth of 16% Y/Y and a Premium ARPU* decline of 6% Y/Y to €4.34 (or down 1% constant currency*). Excluding the impact of FX, ARPU performance w
Slide 10: Gross Margin
Gross Margin Podcasting and Marketplace gains + Other Cost of Revenue favorability aid expansion Gross Margin finished at 26.4% in Q3, up 166 Premium Gross Margin was 29.1% in Q3, up Ad-Supported Gross Margin was 8.3% bps Y/Y. The Y/Y trend reflects improvement in 111 bps Y/Y. The Y/Y trend reflects
Slide 11: Operating Expenses
Operating Expenses Y/Y decline led by lower marketing and personnel costs Operating Expenses declined 13% Y/Y (or down 8% Y/Y on a constant currency* basis), driven primarily by lower marketing expenses and a decrease in personnel and related costs. Social Charge movements were modestly better than
Slide 12: Free Cash Flow
Free Cash Flow Building and sustaining a strong balance sheet Free Cash Flow was €216 million in Q3, an increase Y/Y as a result of higher Net Income adjusted for non-cash items which was partially offset by reduced favorability in net working capital. Additionally, capital expenditures declined €4
Slide 13: MAUs & Subscribers
MAUS & SUBSCRIBERS 13
Slide 14: Monthly Active Users (MAUs)
Monthly Active Users (MAUs) Total MAUs grew 26% Y/Y to 574 million, up from 551 million last quarter and above our guidance by 2 million. Quarterly performance versus our guidance was impacted by: ● Sustained double digit Y/Y growth in all regions ● Outperformance in Rest of World and Latin America
Slide 15: Premium Subscribers
Premium Subscribers Our Premium Subscribers grew 16% Y/Y to 226 million, up from 220 million last quarter. Quarterly performance versus our guidance was impacted by: ● Outperformance across all regions, led by North America and Latin America ● Strong Q3 promotional campaign intake due to top-of-funn
Slide 16: Product & Platform
PRODUCT & PLATFORM 16
Slide 17: Building the World's #1 Audio Network
Building the World’s #1 Audio Network Deepened partnership with Roku to make video Expanded AI DJ to 50 more markets and introduced In October, made over 150,000 audiobooks ads available in the Spotify app experience on new ways for users to listen with features such as Jam, available to eligible Pr
Slide 18: Podcasting
Podcasting Piloted Voice Translations, powered by AI, Joined forces with Stephen Colbert, Released a wave of new features for podcasters to translate select podcasts into additional Jimmy Fallon, Jimmy Kimmel, Seth to get discovered and grow their audiences languages in the podcaster’s voice. Meyers
Slide 19: Music
Music Released a new Sponsored Expanded Marquee In August, Zach Bryan Travis Scott released his highly Recommendation, Showcase, self-serve buying in Spotify released his eponymous fourth anticipated UTOPIA which that lets creators promote new and for Artists to all eligible artist studio album and
Slide 20: FC Barcelona
FC Barcelona Kicked off FC Barcelona’s preseason tour and the second year of our partnership by bringing together the worlds of music and football through matches and studio tours, as well as collaborations with artists and fans. 20
Slide 21: Outlook
OUTLOOK 21
Slide 22: Outlook for Q4'23
Outlook for Q4’23 The following forward-looking statements reflect Spotify’s expectations for Q4 2023 as of October 24, 2023 and are subject to substantial uncertainty. Total MAUs 601 million Implies the addition of approximately 27 million net new MAUs in the quarter Total Premium Subscribers 235 m
Slide 23: Webcast Information and Use of Non-IFRS Measures
Webcast Information We will host a live question and answer session starting at 8:00 a.m. ET today on investors.spotify.com. Daniel Ek, our Founder and CEO, and Paul Vogel, our Chief Financial Officer, will be on hand to answer questions submitted through slido.com using the event code #SpotifyEarni
Slide 24: Financial Statements
FINANCIAL STATEMENTS 24
Slide 25: Trending Charts
Trending Charts MAUs, Ad-Supported Users, Premium Subscribers & Revenue By Segment * Last Twelve Months (LTM) represents annual performance covering the preceding 12 months relative to the last day of the quarter. 25
Slide 26: Trending Charts
Trending Charts Gross Profit By Segment, Gross Margin By Segment & Free Cash Flow * Last Twelve Months (LTM) represents annual performance covering the preceding 12 months relative to the last day of the quarter. 26
Slide 27: Interim condensed consolidated statement of operations
Interim condensed consolidated statement of operations (Unaudited) (in € millions, except share and per share data) Three months ended September 30, 2023 June 30, 2023 September 30, 2022 Revenue 3,357 3,177 3,036 Cost of revenue 2,472 2,411 2,286 Gross profit 885 766 750 Research and development 369
Slide 28: Interim condensed consolidated statement of financial position
Interim condensed consolidated statement of financial position (Unaudited) (in € millions) September 30, 2023 December 31, 2022 Assets Non-current assets Lease right-of-use assets 343 417 Property and equipment 275 348 Goodwill 1,180 1,168 Intangible assets 98 127 Long term investments 903 1,138 Res
Slide 29: Interim condensed consolidated statement of cash flows
Interim condensed consolidated statement of cash flows (Unaudited) (in € millions) Three months ended September 30, 2023 June 30, 2023 September 30, 2022 Operating activities Net income/(loss) 65 (302) (166) Adjustments to reconcile net income/(loss) to net cash flows Depreciation of property and eq
Slide 30: Calculation of basic and diluted earnings/(loss) per share
Calculation of basic and diluted earnings/(loss) per share (Unaudited) (in € millions, except share and per share data) Three months ended September 30, 2023 June 30, 2023 September 30, 2022 Basic earnings/(loss) per share Net income/(loss) attributable to owners of the parent 65 (302) (166) Shares
Slide 31: Reconciliation of IFRS to non-IFRS results
Reconciliation of IFRS to non-IFRS results Revenue on a constant currency basis (Unaudited) (in € millions, except percentages) Three months ended September 30, 2023 September 30, 2022 IFRS revenue 3,357 3,036 Foreign exchange effect on 2023 revenue using 2022 rates (188) Revenue excluding foreign e
Slide 32: Reconciliation of IFRS to non-IFRS results
Reconciliation of IFRS to non-IFRS results Operating expenses on a constant currency basis (Unaudited) (in € millions, except percentages) Three months ended September 30, 2023 September 30, 2022 IFRS Operating expenses 853 978 Foreign exchange effect on 2023 operating expenses using 2022 rates (49)
Slide 33: Reconciliation of IFRS to non-IFRS results
Reconciliation of IFRS to non-IFRS results Free Cash Flow (Unaudited) (in € millions) Three months ended March 31, June 30, September December March 31, June 30, September December March 31, June 30, September December March 31, June 30, September 2020 2020 30, 2020 31, 2020 2021 2021 30, 2021 31, 2
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