Slide 1: Q2 2023 Update
Q2 2023 Update July 25th, 2023 1
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 2
Slide 3: Executive Summary
Executive Summary The business performed very well in Q2, led by USER & FINANCIAL SUMMARY Q2 2022 Q1 2023 Q2 2023 Y/Y Q/Q exceptionally strong MAU and Subscriber results. MAU USERS (M) net additions of 36 million were 21 million above Total Monthly Active Users ("MAUs") 433 515 551 27% 7% guidance—a
Slide 4: Key Highlights
Key Highlights All time high MAU growth and Accelerating constant Unveiled new personalized strongest Q2 to date for currency* Revenue growth experiences for users and Subscriber net additions and Adjusted Gross Margin* tools for advertisers expansion ● MAUs grew 27% Y/Y to 551 million, ● Total Reve
Slide 5: Key Highlights: Actuals vs. Guidance
Key Highlights: Actuals vs. Guidance Results Q2 2023 Actuals Guidance Monthly Active Users (M) Above 551 530 Users Premium Subscribers (M) Above 220 217 Results Q2 2023 Actuals Guidance Total Revenue (€B) In-line €3.2 €3.2 Financials Gross Margin --- 24.1% 25.5% Adjusted Gross Margin* In-line 25.5%
Slide 6: Financial Summary
FINANCIAL SUMMARY 6
Slide 7: Financial Summary
Financial Summary USER, FINANCIAL & LIQUIDITY SUMMARY Q2 2022 Q3 2022 Q4 2022 Q1 2023 Q2 2023 Y/Y Y/Y FXN* USERS (M) Total Monthly Active Users ("MAUs") 433 456 489 515 551 27% -- Premium Subscribers 188 195 205 210 220 17% -- Ad-Supported MAUs 256 273 295 317 343 34% -- FINANCIALS (€M) Premium 2,50
Slide 8: Financial Summary
Financial Summary Revenue Revenue of €3,177 million grew 11% Y/Y in Q2 (or 14% Y/Y constant currency*), reflecting: ● Premium Revenue growth of 11% Y/Y (or 14% Y/Y constant currency*), led by subscriber gains; and ● Ad-Supported Revenue growth of 12% Y/Y (or 15% Y/Y constant currency*) Gross Margin
Slide 9: Revenue
Revenue Consistent Premium growth, led by subscribers Premium Revenue grew 11% Y/Y to €2,773 million (or 14% Y/Y constant currency*), reflecting subscriber growth of 17% Y/Y and a Premium ARPU* decline of 6% Y/Y to €4.27 (or down 3% constant currency*). Excluding the impact of FX, ARPU performance w
Slide 10: Gross Margin
Gross Margin Podcasting improvement and Other Cost of Revenue favorability aid expansion Car Thing charge, net Car Thing charge, net Adjustments and net charges from efficiency activities Adjustments and net charges from efficiency activities Adjustments and net charges from efficiency activities Gr
Slide 11: Operating Expenses
Operating Expenses Primarily driven by efficiency related charges Operating Expenses grew 13% Y/Y (or 16% constant currency*), driven predominantly by charges related to efficiency efforts of €91 million (contributing ~1,000 bps to Y/Y Operating Expense growth), of which roughly €83 million were rel
Slide 12: Free Cash Flow
Free Cash Flow Building and sustaining a strong balance sheet Free Cash Flow was €9 million in Q2, a decrease Y/Y as a result of reduced favorability in net working capital specifically related to the timing of certain payments in Q2. Additionally, capital expenditures declined €3 million Y/Y to €2
Slide 13: MAUs & Subscribers
MAUS & SUBSCRIBERS 13
Slide 14: Monthly Active Users (MAUs)
Monthly Active Users (MAUs) Total MAUs grew 27% Y/Y to 551 million, up from 515 million last quarter and above our guidance by 21 million. Quarterly performance versus our guidance was impacted by: ● Record high net additions with outperformance across all regions led by Rest of World and Latin Amer
Slide 15: Premium Subscribers
Premium Subscribers Our Premium Subscribers grew 17% Y/Y to 220 million, up from 210 million last quarter. Quarterly performance versus our guidance was impacted by: ● Largest Q2 Subscriber net additions in company history across nearly all regions ● Q2 promotional campaign contributing to subscribe
Slide 16: Product & Platform
PRODUCT & PLATFORM 16
Slide 17: Building the World's #1 Audio Network
Building the World’s #1 Audio Network Rolled out AI DJ to Premium users Redesigned our Desktop Continued to personalize the user Launched Spotify Ad in the United Kingdom and Ireland, experience with a new look for experience with 11 new languages Analytics, a free global the most commonly requested
Slide 18: Podcasting
Podcasting Announced a new Spotify Deepened engagement with users Unveiled to Megaphone publishers broadcast-to-podcast Original launching later this year around the world with more than 100,000 technology that allows broadcast publishers to increase with comedian and former The video podcasts now a
Slide 19: Music
Music Peso Pluma's GENESIS became the For the first time ever, we allowed fans to take Loreen won big at Eurovision and on most streamed Musica Mexicana over and curate the editorial Latin Gen-Z driven Spotify: By the competition finale, album in a week ever after its release playlist: Fuego, by sub
Slide 20: Outlook
OUTLOOK 20
Slide 21: Outlook for Q3'23
Outlook for Q3’23 The following forward-looking statements reflect Spotify’s expectations for Q3 2023 as of July 25, 2023 and are subject to substantial uncertainty. Total MAUs 572 million Implies the addition of approximately 21 million net new MAUs in the quarter Total Premium Subscribers 224 mill
Slide 22: Webcast Information
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 23: Financial Statements
FINANCIAL STATEMENTS 23
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. 24
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. 25
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, 2023 March 31, 2023 June 30, 2022 Revenue 3,177 3,042 2,864 Cost of revenue 2,411 2,276 2,160 Gross profit 766 766 704 Research and development 453 435 336
Slide 27: Interim condensed consolidated statement of financial position
Interim condensed consolidated statement of financial position (Unaudited) (in € millions) June 30, 2023 December 31, 2022 Assets Non-current assets Lease right-of-use assets 344 417 Property and equipment 280 348 Goodwill 1,148 1,168 Intangible assets 105 127 Long term investments 1,015 1,138 Restr
Slide 28: Interim condensed consolidated statement of cash flows
Interim condensed consolidated statement of cash flows (Unaudited) (in € millions) Three months ended June 30, 2023 March 31, 2023 June 30, 2022 Operating activities Net loss (302) (225) (125) Adjustments to reconcile net loss to net cash flows Depreciation of property and equipment and lease right-
Slide 29: Calculation of basic and diluted loss per share
Calculation of basic and diluted loss per share (Unaudited) (in € millions, except share and per share data) Three months ended June 30, 2023 March 31, 2023 June 30, 2022 Basic loss per share Net loss attributable to owners of the parent (302) (225) (125) Shares used in computation: Weighted-average
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, 2023 June 30, 2022 IFRS revenue 3,177 2,864 Foreign exchange effect on 2023 revenue using 2022 rates (94) Revenue excluding foreign exchange eff
Slide 31: 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, 2019 2020 2020 30, 2020 31, 2020 2021 2021 30, 20
Slide 32: Reconciliation of IFRS to non-IFRS results
Reconciliation of IFRS to non-IFRS results Adjusted gross profit (Unaudited) (in € millions, except percentages) Three months ended Three months ended Three months ended June 30, 2023 March 31, 2023 June 30, 2022 June 30, 2023 March 31, 2023 June 30, 2022 June 30, 2023 March 31, 2023 June 30, 2022 C
Slide 33: Appendix
APPENDIX 33
Slide 34: Total Gross Margin Adjustments
Total Gross Margin Adjustments All charges related to efficiency related activities were not included in guidance *Adjusted Gross Margin is a non-IFRS measure. See "Use of Non-IFRS Measures" and "Reconciliation of IFRS to Non-IFRS Results" for additional information. 34
Slide 35: 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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