Slide 1: Q3 2022 Update
Q3 2022 Update October 25th, 2022 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.21 Financial Statements p.24 2 2
Slide 3: Executive Summary
Executive Summary USER & FINANCIAL SUMMARY Q3 2021 Q2 2022 Q3 2022 Y/Y Q/Q The majority of our key metrics surpassed guidance in Q3’22, led by MAU and Subscriber outperformance and USERS (M) healthy Revenue growth. Similar to last quarter, MAU Total Monthly Active Users ("MAUs") 381 433 456 20% 5% g
Slide 4: Key Highlights
Key Highlights Broad based outperformance 21% Y/Y Revenue growth Audiobooks launched in the on MAUs and Subscribers driven by Premium United States ● MAUs grew 20% Y/Y to 456 million, ● Total Revenue grew 21% Y/Y ● Launched the first iteration of 6 million above guidance. Net to €3.0 billion Audiobo
Slide 5: Key Highlights: Actuals vs. Guidance
Key Highlights: Actuals vs. Guidance Results Q3 2022 Actuals Guidance Monthly Active Users (M) Above 456 450 Users Premium Subscribers (M) Above 195 194 Results Q3 2022 Actuals Guidance Total Revenue (€M) Above €3,036 €3,000 Financials Gross Margin Below 24.7% 25.2% Operating (Loss)/Income (€M) Belo
Slide 6: Financial Summary
FINANCIAL SUMMARY 6
Slide 7: Financial Summary
Financial Summary USER, FINANCIAL & LIQUIDITY SUMMARY Q3 2021 Q4 2021 Q1 2022 Q2 2022 Q3 2022 Y/Y USERS (M) Total Monthly Active Users ("MAUs") 381 406 422 433 456 20% Premium Subscribers 172 180 182 188 195 13% Ad-Supported MAUs 220 236 252 256 273 24% FINANCIALS (€M) Premium 2,178 2,295 2,379 2,50
Slide 8: Financial Summary
Financial Summary Revenue Revenue of €3,036 million grew 21% Y/Y in Q3 (or 12% Y/Y constant currency), reflecting: ● Premium Revenue growth of 22% Y/Y (or 13% Y/Y constant currency), led by subscriber gains; and ● Ad-Supported Revenue growth of 19% Y/Y (or 3% Y/Y constant currency), led by podcastin
Slide 9: Revenue
Revenue Resilient Premium growth, led by subscribers Premium Revenue grew 22% Y/Y to €2,651 million, reflecting subscriber growth of 13% Y/Y and Premium ARPU¹ growth of 7% Y/Y to €4.63 (or down 1% constant currency). Excluding the impact of FX, ARPU performance was impacted by market mix. Ad-Support
Slide 10: Gross Margin
Gross Margin Marketplace and Podcasting benefits offset by content/product investments and accruals Gross Margin finished at 24.7% in Q3, Premium Gross Margin was 28.0% in Q3, Ad-Supported Gross Margin was 1.8% in Q3, reflecting continued Y/Y benefit from down 104 bps Y/Y, reflecting Marketplace dow
Slide 11: Operating Expenses
Operating Expenses Growth largely driven by headcount expansion and unfavorable FX impact Operating Expenses grew 65% Y/Y (or 51% constant currency), largely reflecting various growth initiatives that were greenlit toward the end of 2021 and the impact of recent acquisitions such as Podsights, Finda
Slide 12: Free Cash Flow
Free Cash Flow The 10th quarter in a row of positive FCF Free Cash Flow was €35 million in Q3, a decrease Y/Y as lower Net Income adjusted for non-cash items was partially offset by favorability in net working capital. Capital expenditures decreased €20 million Y/Y to €5 million as a result of the c
Slide 13: MAUs & Subscribers
MAUS & SUBSCRIBERS 13
Slide 14: Monthly Active Users (MAUs)
Monthly Active Users (MAUs) Total MAUs grew 20% Y/Y to 456 million, up from 433 million last quarter and above our guidance by 6 million. Quarterly performance versus our guidance was impacted by: ● Outperformance across all regions ● Better than expected intake in India as a result of a multimedia
Slide 15: Premium Subscribers
Premium Subscribers Our Premium Subscribers grew 13% Y/Y to 195 million, up from 188 million last quarter. Quarterly performance versus our guidance was impacted by: ● Outperformance across all regions led by Latin America ● Better than expected Q3 promotional campaign results across all regions ● C
Slide 16: Product & Platform
PRODUCT & PLATFORM 16
Slide 17: Audiobooks
Audiobooks At the end of September, the ability to purchase and listen to more than 300,000 audiobooks titles became available to Spotify listeners in the United States. This is the first iteration of the audiobooks experience for users on Spotify and fits seamlessly alongside preexisting music and
Slide 18: Two-Sided Marketplace & Podcasting
Two-Sided Marketplace & Podcasting Two-Sided Marketplace Podcasting During the quarter, Sponsored Recommendations continued At the end of Q3, we had 4.7 million podcasts on the to exhibit strength with triple digit Y/Y growth in total platform. The number of MAUs that engaged with campaign volume an
Slide 19: FC Barcelona Partnership Kicks Off
FC Barcelona Partnership Kicks Off Kicked off our partnership with FC Barcelona by showcasing 14 artists from 8 markets across the on-stadium inventory, reaching tens of millions of TV viewers and 90,000+ fans in the stadium at each of the three La Liga matches in August and September. 19
Slide 20: New Home Feed
New Home Feed In August, we rolled out a new Home feed to users allowing for more personalized discovery of Music and Podcasts. 20
Slide 21: Outlook
OUTLOOK 21
Slide 22: Outlook for Q4'22
Outlook for Q4’22 The following forward-looking statements reflect Spotify’s expectations for Q4 2022 as of October 25, 2022 and are subject to substantial uncertainty. Total MAUs 479 million Implies the addition of approximately 23 million net new MAUs in the quarter Total Premium Subscribers 202 m
Slide 23: Webcast Information and Use of Non-IFRS Measures
Webcast Information We will host a live question and answer session starting at 4:30 p.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: Condensed consolidated statement of operations
Condensed consolidated statement of operations (Unaudited) (in € millions, except share and per share data) Three months ended Nine months ended September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Revenue 3,036 2,864 2,501 8,561 6,979 Cost of revenue 2,286 2,160
Slide 28: Condensed consolidated statement of financial position
Condensed consolidated statement of financial position (Unaudited) (in € millions) September 30, 2022 December 31, 2021 Assets Non-current assets Lease right-of-use assets 453 437 Property and equipment 382 372 Goodwill 1,261 894 Intangible assets 153 89 Long term investments 630 916 Restricted cash
Slide 29: Condensed consolidated statement of cash flows
Condensed consolidated statement of cash flows (Unaudited) (in € millions) Three months ended Nine months ended September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Operating activities Net (loss)/income (166) (125) 2 (160) 5 Adjustments to reconcile net (loss)/i
Slide 30: Calculation of basic and diluted (loss)/earnings per share
Calculation of basic and diluted (loss)/earnings per share (Unaudited) (in € millions, except share and per share data) Three months ended Nine months ended September 30, 2022 June 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 Basic (loss)/earnings per share Net (loss)/income att
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 Nine months ended September 30, 2022 September 30, 2021 September 30, 2022 September 30, 2021 IFRS revenue 3,036 2,501 8,561 6,979 Foreign exchange effec
Slide 32: Reconciliation of IFRS to non-IFRS results
Reconciliation of IFRS to non-IFRS results Free Cash Flow (Unaudited) (in € millions) Nine months ended September 30, 2022 September 30, 2021 Net cash flows from operating activities 116 242 Capital expenditures (20) (69) Change in restricted cash (2) 1 Free Cash Flow 94 174 Free Cash Flow (Unaudite
Slide 33: 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, 2022 September 30, 2021 IFRS Operating expenses 978 593 Foreign exchange effect on 2022 operating expenses using 2021 rates 85 O
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