Slide 1: Q2 2024 Update
Q2 2024 Update July 23rd, 2024
Slide 2: 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.20 Financial Statements p.23 2
Slide 3: Executive Summary
Executive Summary Our business continued to perform well in Q2, led by USER & FINANCIAL SUMMARY Q2 2023 Q1 2024 Q2 2024 Y/Y Q/Q healthy subscriber gains, improved monetization and record profitability. Although we did see another quarter of USERS (M) MAU variability, funnel conversion remained stron
Slide 4: Key Highlights
Key Highlights Double digit Y/Y growth in Strong Revenue growth with Unveiled new experiences MAUs and Subscribers record high profitability and offerings for users and advertisers ● MAUs grew 14% Y/Y to 626 million, ● Total Revenue grew 20% Y/Y to €3.8 ● Expanded video podcast catalog to reflecting
Slide 5: Key Highlights: Actuals vs. Guidance
Key Highlights: Actuals vs. Guidance Results Q2 2024 Actuals Guidance Monthly Active Users (M) Below 626 631 Users Premium Subscribers (M) Above 246 245 Results Q2 2024 Actuals Guidance Total Revenue (€B) In-Line €3.8 €3.8 Financials Gross Margin Above 29.2% 28.1% Operating Income (€M)* Above €266 €
Slide 6: Financial Summary
FINANCIAL SUMMARY
Slide 7: Financial Summary
Financial Summary USER, FINANCIAL & LIQUIDITY SUMMARY Q2 2023 Q3 2023 Q4 2023 Q1 2024 Q2 2024 Y/Y Y/Y FXN* USERS (M) Total Monthly Active Users ("MAUs") 551 574 602 615 626 14% -- Premium Subscribers 220 226 236 239 246 12% -- Ad-Supported MAUs 343 361 379 388 393 15% -- FINANCIALS (€M) Premium 2,77
Slide 8: Financial Summary
Financial Summary Revenue Revenue of €3,807 million grew 20% Y/Y in Q2 (or 21% Y/Y constant currency*), reflecting: ● Premium Revenue growth of 21% Y/Y (or 22% Y/Y constant currency*), driven by subscriber gains and ARPU increases; and ● Ad-Supported Revenue growth of 13% Y/Y (or 12% Y/Y constant cu
Slide 9: Revenue
Revenue Improved Premium growth led by ARPU acceleration Premium Revenue grew 21% Y/Y to €3,351 million (or 22% Y/Y constant currency*), reflecting subscriber growth of 12% Y/Y and a Premium ARPU increase of 8% Y/Y to €4.62 (or up 10% Y/Y constant currency vs. 7% Y/Y in Q1’24). Excluding the impact
Slide 10: Gross Margin
Gross Margin Music and podcast gains along with Other Cost of Revenue favorability aid Y/Y expansion Gross Margin finished at 29.2% in Q2, up 510 Premium Gross Margin was 31.4% in Q2, up Ad-Supported Gross Margin was 13.4% bps Y/Y. The Y/Y trend reflects improvement 291 bps Y/Y. The Y/Y trend reflec
Slide 11: Operating Expenses
Operating Expenses Y/Y declines driven by increased focus on efficiency Operating Expenses declined 16% Y/Y in Q2. Y/Y changes in Social Charge movements elevated Y/Y expense growth by ~400 bps while the lapping of the prior year charges related to efficiency initiatives lowered expense growth by ~7
Slide 12: Free Cash Flow
Free Cash Flow Record performance aids balance sheet strength Free Cash Flow was €490 million in Q2, a record high as a result of higher Net Income adjusted for non-cash items and favorability in net working capital. Capital expenditures were flat Y/Y at €2 million. While the magnitude of Free Cash
Slide 13: MAUs & Subscribers
MAUS & SUBSCRIBERS
Slide 14: Monthly Active Users (MAUs)
Monthly Active Users (MAUs) Total MAUs grew 14% Y/Y to 626 million, up from 615 million last quarter, but below our guidance by 5 million (<1%). Quarterly performance reflected: ● Growth across all regions, with Q/Q net additions led by Rest of World and Europe ● Continued recalibration of our marke
Slide 15: Premium Subscribers
Premium Subscribers Our Premium Subscribers grew 12% Y/Y to 246 million, up from 239 million last quarter and 1 million above guidance. Quarterly performance reflected: ● Y/Y and Q/Q growth across all regions, with outperformance led by North America and Europe ● Strong Q2 promotional campaign intak
Slide 16: Product & Platform
PRODUCT & PLATFORM
Slide 17: Growing Global Music and Artist Discovery
Growing Global Music and Artist Discovery Unveiled Live Listening Parties with Rolled out AI Playlist in Beta enabling users in the Predicted Spotify’s 2024 Songs of Summer as numerous artists including Billie Eilish and United Kingdom and Australia to create playlists by the Editorial team highligh
Slide 18: Growing User Experiences and Offerings
Growing User Experiences and Offerings There are now more than 250,000 video podcast Announced Countdown Pages for audiobooks, Introduced a new Spotify Basic plan in Australia, shows on Spotify and more than 170 million users allowing listeners to pre-save audiobooks before a the United Kingdom and
Slide 19: Expanding Advertising Innovation
Expanding Advertising Innovation Introduced Creative Lab, Spotify’s new in-house creative agency that Announced the forthcoming launch of Quick Audio, a generative helps partners build brand experiences that leverage Spotify's creative and AI tool for advertisers to create scripts and voiceovers. cu
Slide 20: Outlook
OUTLOOK
Slide 21: Outlook for Q3'24
Outlook for Q3’24 The following forward-looking statements reflect Spotify’s expectations for Q3 2024 as of July 23, 2024 and are subject to substantial uncertainty. Total MAUs 639 million Implies the addition of approximately 13 million net new MAUs in the quarter Total Premium Subscribers 251 mill
Slide 22: 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 Ben Kung, our Interim Chief Financial Officer, will be on hand to answer questions submitted through slido.com using the event code #Spotif
Slide 23: Financial Statements
FINANCIAL STATEMENTS
Slide 24: 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.
Slide 25: 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.
Slide 26: Interim condensed consolidated statement of operations
Interim condensed consolidated statement of operations (Unaudited) (in € millions, except share and per share data) Three months ended June 30, 2024 March 31, 2024 June 30, 2023 Revenue 3,807 3,636 3,177 Cost of revenue 2,695 2,632 2,411 Gross profit 1,112 1,004 766 Research and development 379 389
Slide 27: Interim condensed consolidated statement of financial position
Interim condensed consolidated statement of financial position (Unaudited) (in € millions) June 30, 2024 December 31, 2023 Assets Non-current assets Lease right-of-use assets 254 300 Property and equipment 211 247 Goodwill 1,167 1,137 Intangible assets 68 84 Long term investments 1,931 1,215 Restric
Slide 28: Interim condensed consolidated statement of cash flows
Interim condensed consolidated statement of cash flows (Unaudited) (in € millions) Three months ended June 30, 2024 March 31, 2024 June 30, 2023 Operating activities Net income/(loss) 274 197 (302) Adjustments to reconcile net income/(loss) to net cash flows Depreciation of property and equipment 21
Slide 29: 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 June 30, 2024 March 31, 2024 June 30, 2023 Basic earnings/(loss) per share Net income/(loss) attributable to owners of the parent 274 197 (302) Shares used in co
Slide 30: 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 June 30, 2024 June 30, 2023 IFRS revenue 3,807 3,177 Foreign exchange effect on 2024 revenue using 2023 rates (41) Revenue excluding foreign exchange eff
Slide 31: 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 June 30, 2024 June 30, 2023 IFRS Operating expenses 846 1,013 Foreign exchange effect on 2024 operating expenses using 2023 rates 3 Operating
Slide 32: Reconciliation of IFRS to non-IFRS results
Reconciliation of IFRS to non-IFRS results Free Cash Flow (Unaudited) (in € millions) Three months ended December March 31, June 30, September December March 31, June 30, September December March 31, June 30, September December March 31, June 30, 31, 2020 2021 2021 30, 2021 31, 2021 2022 2022 30, 20
Slide 33: Appendix
APPENDIX
Slide 34: Social Charges Sensitivity
Social Charges Sensitivity Meaningful movements in our stock price can lead to Social Charge variance Our guidance incorporates the impact of Social Charges, the vast majority of which appear in Operating Expenses. The amount of Social Charges we accrue for and ultimately pay can be volatile, as the
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