Spotify Technology (SPOT) 26 Oct 222022 Q3 Earnings call transcript

My name is Regina, and I will be your conference operator today. At this time, I would like to welcome everyone to the Spotify Third Quarter 2022 Earnings Call. I would now like to turn the conference over to Bryan Goldberg. Please go ahead.

Thanks, operator, and welcome to Spotify's Third Quarter 2022 Earnings Conference Call.

be our will Vogel, and today CFO. our us Daniel CEO; Ek, Paul Joining opening Daniel comments afterwards, with start We'll from happy answer we'll and to your questions. be and Paul S-L-I-D-O.com submitted going be the can Questions to slido.com, code and by #SpotifyEarningsQXXX. using Slido, directly vote questions the ask find participants relevant. the all into can can and Analysts they most questions then on Instructions]. [Operator we'll If Investor Relations e-mail for you Slido, can reason some question. ir@spotify.com, you add and to your don't have access in at

harbor. me let we safe cover Before quickly the begin,

we'll certain statements of and making filings Commission. letter and our including on on risks or call, could Actual statements, and this performance with shareholders During the to and Securities expectations future estimates be results discussed to today's materially the projections call, forward-looking assumptions are current Exchange about in are subject differ in the uncertainties. factors that because These company. based of

can between furnished letter let's measures. and of over During Form non-IFRS certain it non-IFRS financial also the Relations this financial our And with measures X-K. found on turn also to to section Investor call, website our IFRS refer Daniel. shareholders, in be and Reconciliations today in we'll financial that, to our

time around line growth uncertainty. for us. There's you keeps and on of I of platform metrics. know steadily. a results. is the our revenue nicely it success growing can't our to to portion to is I the it financial start addressing the said outside growth right. which global ads, growth subscriber overall ads macro before, Spotify, was understated: of User very in I've And of world. But for relatively And and you. by top along the remains for date. it a small continues for very mind business all other humming see, perform leading All lot had but another much top environment, be But still the Hey, is aren't it impact thank seeing as but all. all you will our future and business indicator want be to at the can hope we important, everyone, joining review you And solid quarter. I

at with you I I retention in of And also a product our investments great June, or think business that said bad think that margins margins. and results recall, growth, our yet drag same our the may bad business clearly a Day that on engagement, strong Spotify future. in user but at if increased you suspect time, resulted near-term also Investor in product, foreseeable have many experience for at a show a the they've we're the So least QX you and is been

XXXX Day. communicated early Just decisions to with is and the strategic all remind we consistent again in at Investor this everyone,

we've said, this So on we XXXX. as margins start drag to expect in to reverse

return. the deeply And we leads also it user, I the seen And and sticky and of time time to believe the and because Spotify. at And ultimately I beauty at new this how again of happy, whether Investor to with all we've the relationship we're to value churn quality that user. because more experimenting across know is the the created. And a engage experience the and product constantly over is users to teams critical paid factors stay longevity, with of a is in metric users a investment therefore, strength we and because of It what to users of longer, have And are the ways of our what our the worthwhile our acquire is meaningful and have that listeners and our primary that keep and that Day, we we've inform LTV, shared we investments business time many convert and lowest offerings. value our As achieving better relationship, engaged competitive use we is judge retained. decisions strategy working will the our are tool of LTV lifetime spending outcomes. a have set

here's So cost-to-LTV increase that customer an a the about and we're has trade-off lifetime aware we But making cost to that is reiterate also a think ratio. uncertain this is we of value increased. time how result if actions also in of it: maintain our worth and an this want I healthy capital in keenly user, acquisition

higher. should our take more you overall inevitably, you that also moving And mean hurdle we to So our should expect will forward. new spending be this consequently, to be with investments for rate selective

will make We with mind. criteria X in new investments

to over be hurdle long alike. margin our this new This investment the second, And investment it must downturns. must to rate. that the new likely emerge strengthen proposition term, given period in will accretive said, First, users creators value and opportunities over

expect realize And us benefited as we would for to so those advertising our of share cost manage declines I users new a acquisition philosophy pandemic, cost lower opportunity relative may a play down the market. acquire some goes well. us we We that to market do opportunity would customer but the offer example, have our time of as a and this an that it. grow this in at economy for dynamic who the in should not a may challenging softer can As cost this we you would is this find typically then out This to clear quarter. prefer beginning frustrate even in while, LTV. we we the from around that itself saw we present the because of And followed

short show-me that term. the winning right do look get in in the investors But year, for, think be a now just for going our gross it this that, what that's I in would was market. some especially which We've one investment put, don't and transparent Spotify. is on an to been strategy Some nor XXXX I margin result drag term simply that's companies long a

in is as come But nothing This our that a point. has case really with shouldn't changed it quarter fundamentals. surprise

Our business is strong.

a certainty, into heading user are with We better proposition. and XXXX more product stronger cost

out this largely all expected despite environment. the So macro playing we is as

our our laid strong confidence Our you. creators up out we this our Day unchanged. into it it ability on I the then platform Investor for deliver. With that, remains demand the to Bryan go meet amongst consumers at to numbers, the to will Q&A. and quarter, over long-term believe goals based the in And deeper ambitions we and I'll will Paul open hand Thank for and the

performance in respect environment to joining we're what Starting more our with are touch and was record highlight expect QX. upon and with our the bit the add active Great. users to our us. strong largest at like net sustain Thanks, color history. seeing additions excluding high, then thanks, Daniel, exit our macro year-to-date in everyone, a monthly I'd for our and XXX performance. net we grew this operating QX on a outlook. Total our million additions from And year-end. throughout This user to and to Russia,

to the Lat across Premium. X finished regions, with thanks million broad-based We guidance, Moving quarter particularly ahead to XXX Am. subscribers, of strength million

mostly XX% This was by EUR grew to quarter. X ahead driven in the Our guidance slightly foreign of over revenue exchange. billion just year-over-year

gains our by and strong Our business. led double-digit advertising podcasting grew business was in XX% year-on-year

signs the overall the of working that SPAN. particularly despite our and see result below strategy a expectations, strength some headwinds While ad interest this we bit was continued and is near-term macro continue encouraging in to

points. Turning of results by below was basis X of and contributed Gross guidance in margin. to that gross order margin significance. factors XX.X% are XX There the to

slowdown, reflected minimal large they from revised And and publishing impact previous of a adjustment renewal expected U.S. margin. while top to in material impact cost any cost amounts continued the contract has a fluctuations, in a quarters. were shortfall like spanning the small strength together, revenue. U.S. on estimates immaterial in a third, resulted up this revenue. the impact accrual an a the First, modest The outside taken had impact line operating And somewhat added impact some dollar, of advertising quarter. Historically, did X quarter, many, experience on adjustment big had And on we to QX. the and second, impact on expense the had currency growth single the mainly this of macro a currency in the

margin results at to the However, strength dollar, has to gross view it impact in a started our the Investor Taking well. step anything the given as of laid the change margin significant out see don't we of we back, potential Day.

you the Investor greater consistent cost Importantly, quarter, renewal developments. we with IV communicated visibility. we in deals settlement recent very CRB with X the these the to U.S. And related Phonorecord's on rates the to Day. our taken positive offer view together, are targets They at this as proposed profitability along publishing

slightly was lower Looking in a expense. at basis. forecast quarter currency-neutral Growth the operating than on

Currency quarter variance flow. proved XX in points with generated However, $XX free planned. we big to cash operating positive cash was tenth just When than below impact, of or expenses combined modest gross of flow, our touching adding to profit, greater growth. operating guidance. year-over-year over be continues on percentage loss a And million currency fluctuations our slightly free our straight

within basis. We a year moving given timing still free in flow-positive flow and but turn trailing free quarters, the cash in we we see continue for expect to on XX-month be may negative to generate roughly cash And QX, free cash million flow $XXX the forward.

outlook. our to Turning

environment. macro Daniel to as said When to said, at we began And see no XXXX. we impact we XXXX, have continue Looking we growth addition to similar net we material date, our beyond, and at expected to outside MAU levels the global subscriber roughly QX seen monitor ads business. of and that

impact basis. expectations, we see with roughly finish QX we As additions MAU ARPU, Russia. by materially we subscriber it quarter, be the of those to up we With year-end, net enter expect line higher excluding in the mid-single on growth as-reported an to fourth expect digits to respect now and

has are modest or ago, we the we macro the a were a where seeing front, On uncertainty. X still improvement amount month advertising but environment of from reasonable some

such, we in the remain of in decelerating expect another to continue of the long-term growth potential As we but QX, confident quarter business.

factors. restructuring roughly gross that, over a our relative for profitability at go-forward rates basis of an in for of these spread approximately another expense. items while podcasting QX from And I'll too one the out macro of One, QX uncertain respect of efficiently. and anticipate and productivity in exiting year. we have things environment, more certain a we includes negative lap we Day, a has balance against. We you seen by for guidance variance encouraged macroeconomic any around All it's overall we as gross X we capital select year, margin And to is Our points provide lead outlook with we with which also impact We many firmly XX improved been these have result Investor we the will we which on continue back X This the our And XX.X%. closing, And a this likely to operating primarily for to business, including based execute between the our laid the in, of both exposure. deploy with the the studios last, improve investment, course our XXXX a currency highly environment should slowdown, hitting expect reflected impact vision current despite across to to evenly is to advertising basis. year-to-date. at see trends which charge Q&A. at quarter still QX the XXXX, of expansion our of what grow XX% softening is believe be been The margin margin our hand expecting commentary, revenue, gross below of figures model investments is early for business bit a year Bryan on each. to recognize results do

please separate [Operator Paul. pricing. Premium us on there as Thornton YouTube on go today feature you to got #SpotifyEarningsQXXX. your any And first on thoughts a question Instructions]. is at come And right. Hi-Fi around pricing Family? if plan? you've and update or Thanks, then increases secondarily, our Apple either Music All questions, update Matt Can given the from a any is going slido.com Again, to recent

Yes.

this So Daniel. is

places. So increases maybe I last just we in the conclusively years, which many way these earnings world. for, but markets we've so And price X if have good around this the is these not actually the by the from on done calls than mentioned as it's XX of in hoped context, better, same, as before, been been would have in of results more

our proposition. So And an we improvements to take that improving in that value power believe and pricing have that believe on keeps we the significant with consumer just we're amazing this, offering service.

any increasing good that think better. with when will deep us have churn our of our prices, again, the we really because, I their lowest competitors and we engagement So are fare that's for likely competitor,

we years. the specific, we're So is one the up coming is the U.S.-based a things super again, of in would increases, and set we this year developments service. partners. conversation price in do, in well recent relation that and And these with for will it means upcoming in our mostly have like about to pricing to feel to light really And of I this sort that our of good what label

right. All

could are Next going the trajectory? come inflection near-term you are out there that on laid question gross confident in trough Investor to in XXXX What key Anmuth gross as Day? a on And drivers? anything XXXX margins that at is Doug representing is derail margins. from How with the

Yes.

we margin confident still year. of and a margin very is high we gave We So XXXX remain profile Investor investment said level, I'd be times Day. number guidance going at to at the say with an that a the

And about show things seen and has margin we some and We've a it into in in Obviously, and of benefit line, macro to both talked all of a turn like XXXX. particularly move there's and there. forward. You've on drag up that improvements podcast eventually expectations at operating our uncertainty. as gross then less that into see we has drag, a been expect the expense terms changed moving should nothing

terms But X when a of sort the at could in or we turnaround terms be we So podcast even turnaround. the of of our expectations. like always quarter and slope guidance in break gave of term, of look something the long the that when we that the has nothing think impacted of speed you at least at impact over changed could or by all

feel we're little headed that macro still we it. of at really the impact overall all. see trajectory, where kind a bit we the but anything impacting Obviously, don't about So good speed could of

my maybe X think the major as with additions from if Yes. of you really business the can business out And to being more at audiobooks, present with separate it developed it et moment so cetera. standpoint, you really parts that, about the

gross we're of currently side that in the side. gross the be our a we music, up long simply business at look business came in and on that than structural having would the a business a is much then X because the side, parts major the on it's the And way obviously Paul as businesses on be So usually end believe margin podcasting, the question side, question to to type platform music term music then prior mimic about And our said, to podcasting higher higher margin that than normal services. one pricing.

that too. environments, our gives mentioned, confidence obviously going would would it, selective pricing opportunistically, the business, do we prices, into so And been you it But if doing in more raising we've be light any to as in accretive during pandemic macro So of that competitors too. in we'll too. think do and us

we'll term that numbers very during get bullish outlined Investor So these long we Day. that we're

Okay.

Lu. question Mario from Next

embedded? to You or versus events. XXXX projections? live double-digit XXXX recently launched at does sell Day own your tickets roughly was already performing for the internal How move $XXX million Marketplace this the it And site in healthy growth Investor is of needle given revenue the expected and in to it

this one, to with can start I'll Paul Yes. it. and add maybe

of conflating Live record parts. to So X first, there. actually not the think include I they're kind just set business, the straight does Marketplace

we separately Live really days. the very that's although we the and that to feel about early developing. feel how good it's business, business really So And good Marketplace of

That just So experimentation turn ticketing lots of better drove have available results. across in Spotify. to ticketing be more enabling of

are seeing and therefore, more tickets, seeing more people So too. as more improved, ticket tickets, they're conversion rates has and overall sales

completely that, yet, where early Marketplace are good by but days. with I feel And Marketplace, that in we we can't to around it's So really separate feel disclose that business. the that's regards about then just from numbers any we encouraged gave we but part. numbers

throughout Yes. in year. say been the trending has the expectations line I'll sort than with Marketplace Nothing other the of

Okay.

Rich give increasingly the couple that Google us can with us allowing Play for also, of examples of are on you see from Daniel, today? would are they not do Spotify? to problematic you that a question issues Greenfield. Apple. them you you like What earlier appear Next frustrated partnership from And year? update Can this

Yes. Sure, Rich.

want at is And do wars. is been is really, which we the not battle is the how accepting monopoly that that way our dictate do have next to are this with the at the customers what do same the now net-neutrality platform-neutrality I So that we or way from core communication. line we the years, view ability is and our call of gatekeeper of communicate the for want with about We great this customers. our I've we the X a to a key way argument to choose our want to Spotify have that part into customers saying the communicate to in to

of part choice ought there payment second think we The this. method to that that be by is

really that's us last the we part one use having to whatever And that allow And optimal payment access. customer and same is the to So is method the the important. wants use. think

the I point, are your own that offers are actually, same in of competing highly that of you New Times on article that all today And that service a level on would things. a York have want you there's a big read. to call X would to platform, service. you platform access the APIs If we recommend the Those just to offer case

but -- keeps it putting it of it more it's short short more But what's just more. and roadblocks again pretty highlights of us stopping up a think and there. of Apple article, just lengthy gist I the the gist is happening

rejected app present us having make despite or the were to in with the sure this. lawyers times X think was I moment, at we room X really compliant

is said goalposts, experience. if all we've on along. And the an to Android what they a trying is exactly So device that Google, contrast keep beautiful and it on moving same experience which you now

showcases just experience. this an that we So can audiobook build amazing

inherently However, doing think I they're it to on wanted to it's And iOS, frankly, the absurd, be purchasing just Apple because keep allowed broken this. that flow is broken. decidedly

for probably more and something that to It back, been creators holds and for absurd yes, it's years it's just developers insane about the I'm it holds it's So us because bad that's it X back, taking to everyone holding resolution back. vocal get consumers.

another drivers got the XXXX? Doug We've Anmuth. and XQ margin Okay. you one for XQ detail your from And Can softer of what changes in gross outlook? in

what quarter, Yes. detail on a kind of there I'll on and of third Sure. of in recap impacted couple the that maybe But -- business, the in prepared so comments. things some the I I'll say the with said -- my importance. order them was

an of So first the reversal the accrual. was

many oftentimes, relationships of with you As know, have partners. our we royalty

cases, it is a years. in the it results we The X quarter benefit mattered settle actually have because we we in this cases, actually over we Normally, during expire. was those and as need case, the us very modest best the most we're time. in And to In expenses contract. think period some of most for that this we getting as times, impact. when expired negotiating are always a can And we conservative. incur of contracts contracts estimate slight been what new In it the contracts, reason very

quarters adjustments And quarters that we to take X had this over worth quarter. so small in little it of was X

was the that one. So biggest

the same impact on I as part softness material, it not second But margin ad Again, modest with some ad moves small gross softness. a margin. were impact also. talked this the normally the was out of currency as thing something significant the have call currency we one, to and of wasn't did but gross quarter, in Again, too The it. about, enough

that in at as XXXX, and that Just we consistent to good, gave with and IV we international point going cost cost this more the I say Investor the said Day. certainty we the as agreement. Phonorecord cost model the as really back first is well real my the I into head outlook A that certainty lot would quick. comments. cost certainty of as you to and feel

an Currency, respect ago. So of for made, we fourth in a QX, impact as in that of said, of to there all equal there's is the podcasting the some a couple these charge that. made investments little so, I which charge there. quarter, then in in of probably again, again, business And And hit we changes the some feel have about revenue. the really of cost a amounts, things Again, but with of our relative ad good bit there. in a will then or And are month will restructuring a we weeks to all softness XQ. of through runs onetime couple

We've Bazinet. margins got the question will years? next profit gross describe points expand primary XXX X right. basis allow you you All a over X believe you the levers or please Can few Jason from to to XXX

it's probably Investor a really just what Day. reiteration Jason, from Yes. during I said of much the

you recommend would it, business look I essence, a continuously you gross take just when at that. has But in look margin. its music improved highly at So our to

like the of where our margin in However, that looked over -- level were have top few meant it quite hasn't substantially we nonmusic at in at process. all gross moved past line we that had a which kind years, content invested much

in those add can done is belief music And more also then said we've business, than And is our shifts revenue those more be in gross just ones we've higher that to had is to going point is expanding as that that we say podcasting as mix in nonmusic categories heavy it going so side significantly as et podcasting to starts margin would the on music and before, both to I the And content, the moderating. the the so this cetera, side. audiobooks, too. margins we've but XXXX reverse on structurally, keep the last investment

you're And improvements those at gross revenue about that to look starts you the and positive and be of to a to the more long-term talking categories. some adds that the when net of margin going shifting that's improvement. sort more then So up as

All right.

on Greenfield, question elephant-in-the-room and A&R more Rich markets discovery they from given music think Curious time music TikTok's Spotify is executives. the competition. as expanding in how industry hire one about positioned. The and to how threat Another you importance this is TikTok

Yes.

technology has how been So And founders, been very obviously, their how throughout TikTok I'm watch with other executing. well it's impressed formidable the first executing off, like been and to many they've year. growth

So very we we it take when that. seriously at look

we with Now been resi quite for some markets. that said, those in in and time, markets have we've seen growth considerable

really So as relates I feel good competitive about that. it to position our

that I I it, So -- advantage, When It's been haven't good know think, in investing faster taken We feel than from the again, And from about it. watching we competitive us. is everyone -- they've else. move key, only is others. yes, they're share tech, share the in however. to real taken keep they

done also past in So of we you backdrop want this have part investing is we faster. because of much to the should this so how year at reason as move our look

earnings in look we quarter is for this important leading the the metric number number that product do, of probably the I that each call, most do long-term mentioned and -- we but I a So improvements at as success. that indicator last the experiments of

lot you're really of more the into And our makes this that over but feel seeing product, we've product a see of in think it I me it already kind you because XXXX. to will certainly coming So year. good velocity start starting improved

Right.

years? does gives machine from much with you X-plus other confidence question that in have it as Spotify What Spotify Doug with look like What podcasts? success Next has the audiobooks as and can products Anmuth.

Sure. Yes.

it's it's one the content. the think of technology, about to So that first to the year. experience Spotify and what foremost, all as Spotify so enables about do a that is, framework leverage Spotify, way think where we of all is it us a key pillars for just how built across is machine reminder the many throughout really that the to shared predominant verticals to user And what people

base to to in faster. of obviously, ground us all existing and personalization, verticals scale enables to ubiquity, that, new freemium, And facets. go it cross-sell of addition gain audience take So the to the those and

podcasting, so we've start at is position So on podcast to never from successful before us that in why able podcasting. and been music Spotify, when upsell people to you to got we've to that listened to look the because who is what the reason listening been #X

audiobooks if pretty offering billions at And so about books still that of a market that millions industry, from around something niche you people, is audiobooks should if big of hundreds when world. consumers that And only belief our is by the by it's pretty principles, enjoyed while a enjoyed tens you of the be the that is audiobooks millions clear think look be should first people, not of around world. of

key absolutely us. So market is to grow that for

more of and there's of And about healthy sides, existing And but distribution leverage better get get ubiquity experience to that that in the can And so BXB probably adding benefits expect else personalization, then we more then a so way analogy, on more channel the thing the the business experience, that distribution freemium an verticals. to you double whammy. or hard you ones that built. actually verticals way, think more if more -- in to us of these was about the a add where we get products want customers kept to I think and the and that Salesforce door, Spotify sort is to someone they've then these that, in and machine are should better addition investing in more better to

to of machine we're business and we distribution vertical can think more with a offering the as where Spotify consumers. to each you but have more into our about going do ability So that leveraging the deeper deeper and

expand So there's plenty coming the to of in years. opportunities

All right.

Batya your profitability Can business? this podcasting. on Levi engagement on and podcast more the expectations reach Next question provide to color you of part in from

Yes.

as been percent up podcast increase. up also MAU year-on-year. in a our And podcast consumption podcast continue to of engagement then has MAU seen strong. So podcast MAU was total is QX. in per We've It again

build to on profitability across the to podcasting. on trends strong services we the continue mentioned really out in audience, grow like the and our we seen the general the feel to we've we're Investor to generate to Day. And that right all earlier with continue monetize, reach, ability continue of we at also So and as expand tools call track

All right.

Deepak. from question Next

net XX guidance million for and Your beyond? to for XXXX million subscriber adds What's XXXX versus net about XXXX implies way and XXXX. fourth in of the annual quarter XX adds think XX million in sub right Premium

Yes.

Russia that exiting So in that, includes and at let's impact us look mind number Russia. in XXXX first XXXX. Keep the of

more an you when organic terms it very are net look XXXX at year-over-year and so XXXX on And additions. in of similar basis,

have withdrawal the just our Russia, from out You which impact impactful. was back of to

So number one. that's

you're on in when our XXXX And we next quarter comparisons. given guidance that second, So yet. haven't at We'll do then looking call. any

So feel line even we've this the to out like slightly subscriber had growth I you about year. said, in And better if good really than back expectations. our Russia, right we it's

gross importantly, think All Can right. in you how the And unpack follow-up in Deepak's we on fourth margin quarter got should margins. gross the gross between XXXX? a versus expansion Premium the about Premium ads expectations margin guide?

margin gross going and -- both. kind across in And in but said: had side. which just look into obviously, impact any which sort you on be are again, I've talked QX to overall the other QX XXXX consolidated reiterate which QX a investment XXXX, when gross We've -- look has So won't of Premium margins, as going revenue of they see of margin. any evenly on But we we revenue of hit QX growth perspective, impacts been to of a weakness I to an XXXX business ads year what margin And of from the couple the we are impact reverse. ads at and things identified, and distributed gross side the look as gross a where the most the the overall year. what an and I'll the been to start is or you'll reported, start softness dynamic -- we've about on QX cost at have

model feel and the mentioned, how the about we're good look deploy greenlight profile about thoughtful And and you at to long-term Day. gave our we Daniel continuing As to we we still be capital. the Investor really at and

also already, control that is, is we has business but to I ticking lot negative expect terms our up. of the as expenses kind My allocate margin, on sort margin that music But quite real And the part more you should in heavily. of keep said podcasting it within only been drag how side. as think the had of the And been on I comment a this of the investing we've well. addition been,

All right.

seeing September of state to the in the market. trends talk ad about Next Can any question Eric exit you advertiser that you're from velocity can on respect Sheridan audio on impacts? advertising, or business the by nuances you ad that with share? current Also, digital to type especially of geographic anything

Yes.

advertisement paused EMEA, So had actually really economy saw softness also and passing, the which the around North EMEA. the from the bit some places mostly in business. Queen's the we a have we impacted in those a saw in our U.K., businesses. a geographic perspective, we impacted Even little but for America, week like war Obviously, in

it a we so perspective. definitely there geographic And most saw from

a throughout when of had of look it's QX. velocity, October, you answer. trends a of some exit of We at bit the little obviously kind moderate nuanced terms In seen

would kind the month uncertainty ago thought numbers better where they'd at bit you we were than there's a where those look numbers. we If a are we little a have but in month where to still October be now, ago, of look

the advertisers. from told Paul, about mention what you before, uptake should probably me of too, you sort

it's Yes. a great point. Also --

of continues the macro number of advertising advertisers is and in things monitor at structural and what's the at to look the kind that look and one health you you between SPAN discern when participating that is are So what SPAN, look up. to of at the business that we of move

even of so of And is may it are that structural advertisers really the participating much impact we're from though what macro-related, obviously which look macro we number one period in when you ecosystem. they're in at the a spending standpoint, offering any pure that feel about good and time, how

shows building healthy. And overall health that to our business very so we that believe we're the us that ads continue that seeing we at the are is the year-on-year Spotify that fact grow and structural -- up of

think Paul piece cyclical thing on it's that as cyclical more this for important than thing. or only structural. view the I my Yes. is, a call this a of as said, additions one our decide is X structural And everyone on a whether context to is hand, the firm the And is

about but want position case, competitive Spotify to services reach regards go, the long-term that, they're you via this we there's is the that platforms I relation for or in that's audio dollars customers advertise video So growth dollars. mobile display and competition advertising place be that lot to car offer you each to out of to in marketplace, other. of healthy, advertise because if of advertising, off-line to audio in is relative digital example, still there as as or move to great of one to think want digital the a advertising to going if are in the the a Spotify and them. you well, more advertising and that's But and we think to believe, going in And now in just all on devices, commuting, on is there's

it's I obvious, I And dollar, very there's to places plenty spend our state. about much something audio bucket if different ads a a where fewer to to we but of small there's thinking is than at do the highlight sit going business addition, part and to then think just that's want side really where very perhaps of that in leader, a one advertiser is video think on current in Spotify. they're do So which an about

for in that a smaller any ads. on for than just us rely platforms is the lot business advertising So is solely it headwinds

them, of a about it's term, think I of And this you they much based road a just that our companies, when less suspect road compare the our product that that maps map, lot part quite for some are short platform pretty long there when is lot their redo the they're when us, business. a on other it seeing to So us it's of you important would impacts headwinds because whereas material and smaller to for headwinds. product probably term, but realign in the have

scope that We've got agreeing the label your to think you terms incremental about a When increases, right. Steven be share there price of impact on Cahall label share All will pricing. from you lower pricing a how align upside? by in question interest thinking? do Is and the so royalties

net-net for But Yes. I do win-win choose parties. we on should terms. any both I the label a on that to price can't mean the any specifics of increases again, be comment

of price definitely conversations talking could partners, label in that's context of already we've part about any the increases So with in you when we're and made. imagine, the our the XX even pricing as past

right. All

the launch Could Next feedback evolving do what you question envision Black. any have the the been And of can talk Benjamin you here? audiobooks, coming takeaways or you is from about how product early from share?

super early Again, it's days.

So really is me audiobooks I engagement the among just think and that that healthy and for to very retention looks the at we're solid. look metrics purchasers having,

on hope, additive the happening the engagement but ambition. all was other So platform, early that's being good to it's engagement We see which our it overall.

out. So that it's played nice to see being

in it's this allow something XXXX, to one our we're we've And for in all that. That's purchasing as that been said expectation has We where experience, that will the of of the up and prove. iOS, back end particular in about I'm and that on scale. us on obviously good kind I disappointed, -- and Apple side. will scenarios, the our But feel obviously, in below forth. the in planning without that on despite said Now we trying earlier control, possible all to was been call, I working of of and and knew

All right.

Discovery marketplace its . expand Premium is the to continue and Mode from margins? take and What to needs come question to step two-sided next next going Our for to happen

it's parts the Yes. One this one part. X-sided X other is obviously is and really supply. Overall, of demand,

So participating if demand inventory, simplistic in seeing on consumers, very of helps that. a high products it and releases, more and helps terms, with think then you about more it the more side artists, Marketplace-type that one from

for the kind rather more of it's And so to that's a constant we're both levers major sort of to of pulling try that. same sides us any what on really it's and And doing, than expand innovation.

investment is, gross the in actually within you sort thing chosen We've business, question other margins take expand. just from lot. some Marketplace I the that just some the ability about its seen our broken like record, of helping margin Marketplace it of The the benefit make. margins Again, to being And isn't really the Marketplace drive is which by implying we've a again, now, to the and consolidated future. helping growth kind throughout we've talked margins, and would haven't it's add feel the XXXX. we've the why we of But benefit to reinvest from that's masked good sounding chosen right what about of a seen not but in

right. All

head investment to Next OpEx Are Justin environment? about question to how more you're on of there discuss Patterson. is opportunities from in the come pace this focus growth going productivity? slow Can and count you thinking

opening do. been some we've I focused I very care a because environment on the is may my I remarks, previously this as different said in long Well, I keenly know one that in is macro but not before. investors term, the Yes. definitely this And that -- aware we're than I'm think

hurdle that what for And cost capital me, increased. is of cost capital new for doing investment that that So increase. has that really of any to we're increases, needs means rate the means when that

wanted slow increases In addition of already even planned we light had big to from it's on and And Paul more but probably I say we that, OpEx more to that numbers even obviously can to to OpEx than obviously, But have. for some XXXX. those that, just my manage much prudent more in side. our side that uncertainty, a better of take at down probably context share look

earnings guidance sort clarity where revenue But to ourselves on over we call. think that been set hope a more the and leverage year times, and to past we to And Yes. what terms then we'll a some start flip we the the up next lot couple couple is and being year this said can invested years of to growth of expect you and next focus or And to I of of and I in expense dynamic product as to X. -- over future the for from of obviously, the sort able build give that in that growth it's I see on our have. to XXXX mean we people needed shift how investment start of in business. of manage

price right. functionality from got come there and to be product time Rich here. just All more is price? couple an a to on innovative for Greenfield. fixed besides questions more on all-you-can-eat The one We've a going Are for next service ways your

Yes.

until about investing years has predominantly, you think that All I said, service. So few all-you-can-eat a we advertising as Spotify it ago, is in high-level up being way. subscription, other say, of been now, a thinking way the started the

ARPUs of as think people now it's or And So you see on to on a about the either kind either together ads. combination interesting video how can side. the being on raising X of are subscription blending

is ARPU increasing, opportunity an consumers effectively, not may increasing. the where be point that So the is might see price but

one. to the that's is And too. the mix, So then second la part carte a

now ARPU, few other seen to you've a times. can So do raise and us as see, that way you the

audiobooks, a carte. bought la have which is you So

You also also bought that's carte. tickets have now la concert a live

where the really revenue So modalities majority X the rather come service as us even playing predominantly that's revenues together thinking today. of about of subscription obviously, from than it's the though, a

a more we're in a lot flexibility. particular So on us I the innovating quite lot Southeast all-you-can-eat model, that think already then in gives And Asia.

you So things to the too. to we at there, sort you doing if world indicators makes of look a sense that of there, take parts it see might scale if should of other we're some what want early

ARPU innovation of increase coming price to over increase the I lots So year. rather on sort it of mean took than --

there. come to more lot a So

is to of to cost of And capital Can you All on right. come environment investments discuss going rising time levels Deepak your planned you on from podcast question. got That's on for podcasting. We've XXXX? the more expectations the investment causing return one podcasts? revisit for content

across and Yes. we look I answer all of different our of ways. through this question a all couple of investment lens the on One LTV returns Spotify. is probably of at the would impact content in

having positive So at on every and we're make or going that is we investment to continue decreasing to and looking impact a into lean LTV. increasing

two Number think one. cost is, has of number that's mentioned, gone up. I capital right, Daniel as the So

definitely hurdle is moving going forward. any so we investments any the growth we higher be to make, rate And make, continued

modeling so we'll impact investment looking that be we And our capital. And of to out constantly our commit the and thoughtful about advertising not the goes as as well And at benefits and invest looking to any those top decisions going to combined that to X of make nothing it both how as how will sense. on of and continue forward. change on and then we third, surprisingly, careful we the well get engagement much growth are at user we want as in content

XXXX, faster Yes. us margins that's we we're Investor of revenue growing were And we obviously cost. function content in at to is, Day, a to that expecting addition than said my improve as only growing and

for that's we've before. communicating XXXX and all our along with been So been consistent being what plan

All some right. to And everyone, and back our session. concludes Deepak, call for questions. Daniel Thank for I'll over That thanks, the turn you, closing Q&A remarks. the

call. earnings All today's thank and everyone, for right. you, you, thank Well, listening to Bryan,

thought all confident ourselves, of with there we close be really incredibly more recession, times may and that's accomplished the the precisely just disruption in all roadblocks left war, by seen we've despite we past, remain saying a we in proud demand. and inflation, prudent the we've while of in out we're destination quarter really course pandemic, of nimble were more a X So be. we will chain I'll I'm and than that where we'd as year the threats global a and lingering and supply that for in mapped that chartered be more And there this,

be Record more The details context, for dropping check evening. out tuning please everyone, will more For Thank you, for So and podcast this that later in.

joining. Call today's under the website Earnings Replays. concludes be that on everyone, and And Spotify app will A replay available right. Thanks, for on also Spotify All our call.