Spotify Technology (SPOT) 25 Apr 232023 Q1 Earnings call transcript

Good morning. My name is Julian and I will be a conference operator today. At this time, I would like to welcome everyone to Spotify's First Quarter 2023 Earnings Call. [Operator Instructions].

I would now like to turn the call over to Bryan Goldberg, Head of Investor Relations.

conference. your begin may You

Thank you, conference quarter earnings Spotify's welcome to call. first XXXX and

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

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

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

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

with that, it And Daniel. turn to I'll over

you and All us. right. Hey, so much thank joining for everyone,

the this feel excitement can't I this tremendous a amount quarter. progress call, team about open our we but made really As of help

million the few billion a we've milestones, celebrated surpassing few strongest XXX reaching And subscribers. In X.X fact, QX, going months, since public. this and than over last including more significant over users our represents quarter

our reacceleration X see user the And is level last that's five numbers consistent trend over of remarkable exceeded million is it our to pretty our growth, by this our but quarters. scale, user at XX a expectations Further, in by been and million. for our growth it now subscriber

two growth a fact, pretty this, to based, MAU largest to market promising last across region without accomplish meaning dominating. our this the The In was quarters yet. We And draw of look conclusions were history. lower the broad growth every was growth single this evenly outperformance But a we saw spread marketing top any with on it's of able at early in too level as sign. spend.

me over the all we healthy metrics. years, to heard you growth achieve of this ability as it's before us formula only repeatedly is then of future our for leading play indicator the expect success of that a users, the attract a say out new to again. the drives And well, a And line exceptionally on long successfully matter our over when user top is conversion financial time upwards subscriber worked revenue term. course, rate And one been that's and which increases, fully I other

can about moment I deliver approach the investment when to And and long want they to of stay term, course. timelines talking outcomes a speaking the we on spend our

a recent me example. let you So give

updates these including For our and those more we experience to numerous unveiled of since a in debuted And than an introduced event, updated through who marked user tools ago. and kind changes creator the entirely turn March mobile our its Stream Spotify years in On DJ. AI the XX we new experience, first biggest

and as features, across we're an subs. XX over rolling happen out the XX These several last in But MAU seeing markets, we things retention to been in our of even others cases are to And we've course, well building as this as didn't some months, on acceleration and these overnight. even longer. that XXX shift

than benefits is And not, materialize, often learning, when And even the gradual over But anticipate we relentless quarters, takes our while sometimes shape and years. of consequence our is can't and our investments of their iterating will pursuit several sometimes improving. really manifest do impact we more immediately. a or growth that themselves know

strategic to we and wait stakeholders, We other a for for centered correlation of investments, stronger delivering and users, performance. benefits compound make for creating a the proving the experience course, that for results with seeing is we're overtime, the on our And financial by stakeholders. creators, value exceptional out an

not outcomes say in do fact sometimes ends on to if that they the add XXXs, one is in compounding of that not just not and we're over up. I've but our investing that a often literally But XXXXs improvements parallel. for. to have thing, that attributable And every we talked about working even them success time, one they together do And work, the that's strive things up producing effect. of the

it us as of then, it ebb overtime, So And overtime, really There's innovation, investment and results. seems help really long navigate to waves steadier produces predictable more focus the maintain current uncertainties. think short becomes term flow term of and but and is there's a key to it improvement. an a

But importance don't efficiency. of we to to let that commitment all rethinking are my allow you believe driving long-term talk investing our about the

towards reflection shared at we've shifting question So There's its company. talked Investor year's a our I building the many in last months, that this still last efficient what on know in financials. quarter last as on leaner and becoming early progress is more six no but Day, become really about we

throughout of me in taken we've production spending all XXXX to key remainder the more year, bullish The even other real lead areas reduce and marketing with opportunities about like metrics which steady of estate should beyond. content and makes to the coupled actions and of a progression

detail open the the that, it to for and Bryan behind over for I'll turn with Paul more And up will Q&A. numbers, then it

everyone, joining us. for Great. Thanks, and Daniel, thanks,

last XX net of Let's quarter-over-quarter start strong monthly to and million developing only of quarter. million was up regions. and QX. all-time QX User QX. largest demographics XX the additions exceptionally had users strength was broad-based, developed history guidance, both across grew age QX in second with XXX the year. QX all was our in Total we active nearly in record The in net growth the million This ahead and additions surpassed by largest

Moving to quarter thanks hours platforms. finished subscribers, broad-based million with again of to Engagement content XXX all trends healthy across year-over-year to X the guidance, regions. strong all across QX strength premium. once uplift growth million ahead in with We per MAU were in

as positive our in trends to as We in also churn. MAU saw ratio well DAU

in $X surpassed revenue. And QX first in grew quarter. very Spotify's margin. XX.X% ad a to Gross in Our XX year-on-year, slightly outperformed, gross revenue guidance XX% where of just we as revenue €XXX the advertising. underperformance quarter above million premium basis history by were in in Results was billion marks forecasts the slightly points. offset behind the by topping turning This margin modest

gross Moving than spend to our by planned charges. marketing than cash combined operating better by of million expenses. less Free When include in positive Growth was than million €XX operating a was flow forecast plan. The guidance ahead QX. with lower results of loss also severance-related profit, helped better €XX million. €XX was

over momentum With subscribers, XX an increase MAU, guidance, lot have we it's out continue QX. see in subscribers, from Now million of million strong of of QX MAU QX. an X XXX of we coming clear forecasting to quarter and we're respect XXX increase momentum million million a second looking to ahead, and

are gross of of an operating XX.X% €X.X approximately in million. revenue, We margin a €XXX total roughly forecasting and billion loss

to last the euro. U.S. by we've weakening experiencing revenue, are reverse the the been in the benefits On led expected relative dollar translation currency for six to quarters QX,

result, a XXX As point we growth. forecasting to are headwind a basis

closer to expectation Excluding versus our this effect, for be we €X.X will in our billion, revenue delivered to currency-neutral XX% QX. growth constant accelerating currency growth reflecting XX%

margins XXXX in we ramp our then as well in continue a loss. one gross From final profitability operating throughout improvements as expect a standpoint, note. And steady to sequential

operating Daniel be will mentioned real improvements at we'll remarks, to looking as in be regarding areas we continue such optimization. and efficiency estate As his diligent

we finalize non-cash during this and of the QX, charge decisions, hope lead During quarter. material to some to could these

but included QX earnings potential QX will during charges our report. break not out our have they any occur We we them in guidance, should

it I'll to that, Bryan. over with And back turn

All queue to appear got order questions. for the be please right. we’ll if respect Again the up reading how Thanks, you people preference vote the they in questions, slido.com any #SpotifyEarningsQXXX, their go in with to Paul. questions

to And it linearity Thornton question from better going would which you quarter, exiting feared. on first today and to through in the expectations reaccelerated our how talk and in is your Matt seem you're Can come the market, actually seeing advertising. first performed relative i.e., what Ad than quarter? revenue to ad

Yes.

we have sort got on I bit I quarter comments, heading about was heading opening so. throughout think QX, said the better. into well. we're it the million had choppy, as quarter, incrementally into again, similar ad about in As of little slightly like The or we've -- feel my We a XX XX behind trends but momentum side, QX

bit a early it's too little say. So to

we by think but really how a bit small I any relative we market and in way. position the about market the Overall, feel and it a performed us our was We overall to QX. relative nothing how in up performed ad Again, concerns in down. good missed really amount, that

All right.

that of from the the AI track. responsibility come and does music rights allowing preventing Spotify's AI. draws from another recent Use work? create concern as Drake or seen on has Morris resulted of to fake in from going with music creative Mike technology is question holders to next Our distribution artists What new artist's in

as mean, space. role how at you that and history pointed the One in do anything to And first of I've artist this. the a works our ecosystem moving think AI moving I the we of is developing parts currently acknowledge an that care ever platform in creative two this and innovation incredibly question off, creators is I for with Yes. as protect so then about. development technology out fast allowing deeply there's don't your and let's we of is, my seen the fastest, that moment. obviously,

have we seriously. And very, and part are doing is big dual this we the creativity the creators focus, that for artist support that the and role artists so take that guardian, we of of very and

and with state So using lenient bucket. for falls one these there's augmenting that more important AI just fake to to easier everything mentioned everything of bucket which we're allow artists, in falls in the which to industry sort in about probably the expression, things. it's tracks from And of you've constant what dialogue from

these and how we're would So don't and, But artists our artists. complex and very partners on in of innovation that on a depending issues you have single to between straight with constant position strike a and take allowing discussion protecting very, balance the course, creators are happen. what answer want

Okay.

on efficiency. Justin Next question from Patterson operating

when And call, a how new initial a we measuring to these as transitioned is roll on On more expense? quarter speed framed to and you top efficiency efficiency? your gross in org the meaningfully you've earnings you operating fourth margin can Spotify for structure, priority are expect to efforts progress and

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

our we're time kind that way collaboration good in And So driven so the really structure we've But on speed had leading now working. probably and to look the really the is just feeling history. more and speed decision-making. we're I'm in than we've far. really new early indicators of And at about work other of it more Spotify I of decisions any

So I feel about good that.

obviously still that leads actual take products to that then into some time that But then business will actual results. before leads

that, part as to But when note some see efficiency, about relates actual I have talked ways before think output. we important one investors equation. to the that's it's it the I still to of that, will just So go

on the you we want we're to in on. The what of other spend being about and know, I we on talk seeing more don't diligent there. efficiency what part a obviously, Paul, is just what invest equation, bit if little And

there. I Yes. throughout the talked things. add One XXXX, on gross couple of margin seeing I sequential nothing's would changed and a about side is, think we've improvement

as in, number to sequentially And the you throughout saw well. year expect to QX, leverage So improvement persist operating same is guidance in see with that thing than expect throughout saw come the operating QX loss, and you we the sequential loss the the incremental better XXXX. QX we on

come through on So to see we're those starting it lines.

right. All

we mix, subscription question about Next to And promotional business. Thornton market expectations your ARPU a was guidance? should mix, driving and what's on versus than Matt i.e., our Can initial how plan forward? you of vary that, lower expected. FX ARPU looking activity how from talk think little did

X a combination you mentioned. beat things of all kind million. the It's the we side Yes. by Clearly, on of subscriber

So some as additional it plans when in family of duo and upside, growth we have our people on as that promotional. from coming well came

on product driver. came pretty it on maybe the would expectations, And ARPU terms coming Again, in and on it hair standpoint, those so family the more an all biggest was an a but with in from in of users say in and our duo ARPU much impact mix, ARPU. below probably line it's not minor have pretty where meaning I material. of is

Okay.

from Another our on learnings recent updates. to initial Patterson. any Justin interface. creator This question on reactions share product the new Daniel, user is listener you could and

improvements With the think new we forward? going product how pace opportunities of and interface released, user about should the monetization

a Yes. by start context. successful was massive in feedback Perhaps setting to It event. very We've both creators, greater-focused particular, a from of had and just amounts this was users event. where,

single in been Spotify. connect to their about that tools all changes expectation. creators probably positive So to largest history But themselves overwhelmingly also temper they and of it's to new of have express the have the It's the now one with audience.

seriously. very that take we So

still home rolled So for new the announced that out. we instance, is being feed

world We're we iterations and rolling to out just have So the sure consumers have up to gotten. made in most feedback user slowly that. react can the already the make performance feedback. that access dialled we don't we've lots with of And it we've to yet

fully when I be successful good and feel will really So it's rolled that. about very it out,

the that this a product new there's else. behind And of turn it tools one it's moment you we there that well analysts for as on can't takes a educate a some that happened that using whole for a just and quarters us something button you I'm to as all AI And investors on. But do that are or those this roll just be to out instrumentation can. as well. whole infrastructure It's improvements with new because things feature some to our not multi

piece So it's out, the really infrastructure that it rolling and we're good of feel basically but important about an still response. I

teams and performant on rolled initial very well. kind for fully years, massively our think can as teams top that's just And of to we'll start it's machine that really next But I once on see the my big can allowing this rolling is sure for improvements the I out, making remarks. we few AI just from in And iterate and that focus the compounding outlined out, months then many start like we iterating of that. learning then top of

Okay.

the earlier than of expect Lu. year, the final in Next year? Mario workforce severance this to reduction And question this from additional is first regards With or €XX announced we any the X% expense other your million round that in reductions charges should operating QX?

get Let of me take the second part first, out just it to the way.

charge There on gross €XX a that of overall. the the €XX margin. line. small component a actually So severance is was the operating was million million expense hit There

that then in floating there's at gross total, in million €XX of So else nothing there, to two but million that workforce €X €XX out the that numbers of in million reductions. been have workforce, been and OpEx hit And side. terms hit it's margin the terms

efficiency side Daniel I'll talked the take think from of I here. about, kind we've let

I'd is Yes. the six lot is in that but should on is have going financials. progress to I last we a expect I leaner help early us. that footprint. mean looking our think waste estate reflection add really that over And the includes, really only us probably our become obviously, its months, still thing then that for everything investors for real what from And keep forward can

made, higher and not we've as deals mentioned hurdle new reviewing forward. content performing keep are any quarter will I have well obviously last going a We investments on much the they as performing, rates,

it that I to hear your your Apple. being with clearly would for ruling to about D.C. recent to Okay. appears from the trip largely positive, court Daniel. Rich but love A paying off I for versus also perspective message recent cited the platform able And Apple would love is about Spotify then question Greenfield on hear to EPIC Washington, more

I Rich. as disappointed the but not with Yes, characterize it would surprised ruling. probably

a but very getting good I rightly may think does right I'll remarks, called judge's try you Washington pointing decision, important it's just I be As the going anti-steering it, judge was include but And also on this, I'm judge, and worthwhile and there's the think and ruling it is to I I a regulation. just the to fact which reacting they in through read out, the briefly noted provision, future simply were wrong, about regulation future on step that direction. the a paraphrase out, in I conversation think, based making the and referring that where larger the law existing a still not

why and point some I to found these is and didn't much App had very I people I bad. may is lot the the was them Store level of called that of both things. And And did just bill of great not a kind set understanding improvement. details. And is meetings. realize believe this bipartisan, Republicans it to really needed bill laws for of I went Washington this to the us, also new for that needed or I be the are the I a that to supportive issue, And Democrats. very be kind very Ooma do for think of this in those spoke involved of I intricate from

better change from in internet, now can customers in deals of our and that the and customers control marketplace. we're I entrepreneur, for have us through that The as an can case, apps. that of they are in all a are anyone in understanding prevent primarily prevent could using me And And anywhere from the and XX-year-old unilaterally the Internet impact. Internet smartphones to through They, the this that companies talking issue the Apple's democratic when where world there's primary literally billions that place on two is was a there consumers the right even rules. primarily started place now,

want from principal I is progress. on they've that me climate into this better bring for company, communication a want company consumers I super a I and consumer the points if want innovation to to important Republican level, opted able that the those interference and really House to and to And of of aisle to without the communicate across Democrats. be both message and the Senate resonated across So these platforms. both

progress early And issue encouraged lot in a the had here feel but U.S. it's I this we've more lately Europe. in So obviously, still days on

Great.

other you and Mario revenue. Gross XX continue from but points, margin. drag to forward? cost main revenue if Lu guidance what explain of on within expected question basis by was other the Can drag gross that's margins saw going a Next from beat of cost

Yes.

So nuance there's a little bit this. of in

me it. go let So kind through of

look you throughout seen when line. So increase that us. steady the impacting sort on A cost it's lot and has had of slowly throughout costs and delivery a and risen XXXX, we've of XXXX come from streaming into compute that revenue been other year the of other

on so it at And gross as the QX, said, put that negative. still bit pressure to of some of the versus you a had margin look QX when continued outperformance That being a little trend that we of and put to pay to a QX in less off. starting we we saw being starting in some improvements actually see the place thought drag that initiatives and related to efficiency of than

And some three, the was the efficiencies. the increase quarters seen less so kind of given of persisted, we've the while four that for increase last incremental

continue improve more really that plans We've good side line we about gross of so of margin. And got non-royalty-bearing is the feel sort to place item, which in that. to

we're trend. how forward that good with place think in should going I So a

Okay.

podcast deals Anmuth for overinvesting? in gives up content Doug confidence while exclusive XXXX from question 'XX, of you not amount seemingly what retain talent podcasting. With renewal and decent on hit and you overpaying Next can a

Yes.

we're very won't And how the not invest aren't are start I we're we the will in And that. content ones a renew. we calling right case-by-case in basis the to going at be value. relative that deals. performing, future what ones overpaying that those look overinvesting. on by the think performing, in and on we And obviously, to out diligent I you're out do going And is saying can obviously

we impact here. and value understand do for the say Day, things measuring so the I impact this platform our so in where we the on would forth. on two talked Investor about And we subscribers sophisticated lifetime have relative very on One, where tools and at

base. us also, or understanding amortize have we be. the a great think second I are fair part that But means that podcasting helps the price across a paying because opportunity largest a we to then price would platform a what fair now larger

position So better should that's obviously smaller, to a that we a a to because want someone deal we can we against users. base larger in be renew relative amortize should of

subscription are on Black haven't the pricing. Benjamin any being lower-cost seeing from you raised from distributor? Question benefit you Since Okay. pricing,

it different did of think important been in fairly just But to year. note broad-based XX so, raise context, the the outperformance way and One quarter. given outperformance. markets in is that And again, prices we it's would by the last occasions

And So outperforming. it's even haven't those we not in markets, like were we prices. still raised

marginally we with with that's obviously best I've us say up. So have of provider, this primary again, that about we out customers. timing down that not go we're our do we're ability complex cost trade But the time that We is And I'll with that. of Instead, lots to really it. that more about thinking now our value really good figure working raise a before. and will we're partners about. when I've talked opportunity something have isn't that said right, many feel helped because have that may to prices lot part I we before a think label by raise well data increase that it And a to variables. our and the it's price for I over to And a but for strategy, will backs of them work it what's ability, delivering been our being lower other and

Okay.

Rich Greenfield on Another question from advertising.

be revenue. advertising to your of about scaling overall revenue talked XX% You've

revenues? growing moved about should XX% we the the While How your faster subscription getting think let mix than XX%, of to timing hasn't revenue, of lot. it's a alone

Spotify's to part one can and advertising we we Yes, now, larger revenue can't Rich, ability one part I about think of mix. be there's what we feel control. grow still control a for of Right and part really the good

continue better attribution, or continues think in So about there. two, been things an made Obviously, advertising out somewhat the by to and feel we to we've control macro. we bring advancements services, really Spotify last the the the is to the of product can the tools, the doing to build and the we're all measurement, even on, that part that good we've quarter impacted we

Again, our like and we market but down. macro feel overall, we're has outperforming growing the slowed and peer group nicely probably the us

really of So that it's quarters macro of is us, uncertainty there. even how I don't of down, a view going making is beyond that. couple heads think and the we And to XX% that really change long-term sure or our to get innovation product just for

benefit macro the can does when we as as you back, possibly can. that come much So where

Okay. launch your how major us Stream AI subsequent of out AI from labels? the the A on Anmuth of at your Could give thoughts plays some on pushback Doug DJ. question beta version you DJ given from and On copyright

the to from kind of AI important separate sort DJ think it's do AI of I Yes. conversation.

I So in the AI think but positive industry. had we've nothing on itself, across DJ, from and reactions

I the establish think an upload position all owns copyright the our allow a companies. And on. but to copyright, you protect AI pushback and the from actual obviously, it to we drain, likeness, something same are so both on around we're the And where claim be trying and topics and really media not really of like and to what industry right something it's really is it's in labels things or partners creators that that the who working those legitimate issues name with at where time, are platform. concerns. And in we on have innovation, our important those

Okay.

your to you price Michael raise And during Do changing the to Morris plans are subscription pricing. any pricing? what from of question considerations Next XXXX? on plan on current current

start Paul can chime I and can then maybe in.

to it's So context add I a important think here. as just perhaps

partners and my As with in discussion that raised XXXX I we're us like year. in for as but that. prior do our to in response, I XX hope in places last we prices well, around would mentioned

negotiation really that's a So thing.

think to I do many to trying are how to optimize achieve growth. growth. What really But it. there to we just up-level is maybe on ways And we're we're focus can for trying

conversion turn set top grow premium line can subsequently into subscribers would subsequently can still turn growth. will then ARPU base you can or You into to on line achieve a and that you that that lower revenue, then of increase users top

our about that how we that label we're many tools realizes So and thinking growth. industry to as the And realizes have at partners well. as increase our disposal

So that's yes, the like prices raise dialogue that but constant we partners. discussion But XXXX, we're in a our in. really to it's with would

Okay.

Doug from approximately year marketplace for we How outlook about question think should the Anmuth growth on this Another Marketplace. following growth XXXX? XX% in

Yes.

They're I think we're to continues community. the still the be tools a with It really services. loving strong force had engagement QX. very optimistic creator about marketplace. driving and It a for

be the and marketplace. we're have So continue for we haven't all advance given offerings to in strong, optimistic that of to very sort we'll able a target out XXXX. But was QX we

Okay.

optimize Can podcasts. healthy, on engagement the within from provide trends on is Revenue trends growth we're podcasting. recent side? you question even engagement the portfolio, on -- curious some on recent podcast content the Next you color recent Deepak some as

Yes.

has to been engagement. phenomenal it when comes QX overall, quarter So a

predicted much is more engagement pretty than So on up front. every

funnel over is higher certainly on as is MAU it's And sort retention and is we've across higher. true drive up many, the Spotify. acting to user together for healthier great overall we're the is on trend engagement higher, seeing than quarters. So in and many And before, And right healthy the seen podcasting a of to symbiosis podcasting music how podcast DAU music, actual well. both on that's an but now many,

music obviously, to the both great a So have on catalogue that's and mix. the I testament portfolio good about and we feel And really podcasts. content

the and other MAU quarter, Yes. was for in across I music one hours podcasting. really would metric, both just strong add, the listening

metrics, our the uptick engagement So we're on seeing number of point, QX. to Daniel's really side, a engagement in

Okay.

users. Anmuth Another on from Doug question

first million do upside added, the the half first you and Premium for to XXXX XXXX? growth and XX respectively, how XX Given overall and relative in outlook, million quarter about the in subscribers think adds MAUs and net

anymore, guidance year but implied full where is the of we give sort obviously are. question don't We Yes. already in

QX, QX over So if additions just between and side. MAU on for think million you XX our outlook net about we're the

thing last So sub we'd the to same through and be this the year, on halfway half year of side.

So guidance sub about about -- if additions. we hit million for that's our XX QX,

about next So halfway to again, year.

to than the good and our QX. really subside QX both about user and trends other nothing -- the then the So on for side really trajectory the we seen feel we've expectations for and for add

Okay.

opportunities you over these specifically generative question have Do on like from music materially distribution what potential and economics your time? creation? you on Next there from can discuss Deepak developments AI, thoughts on is Daniel, platforms towards to AI. risks Spotify shift are think

Well, again, and fast an caution incredibly early this to is Yes. so it's space. very everyone, days, developing

things before, seen important. it scary and doing all how innovation like with I really think the inspired guess is moment. creative in value cool artist, certain mentioned think in ever and cetera. and question to things I AI I name and the is in -- both Spotify, obviously entire the fairway progress around at attribute As the when you're copyrights just not be but doing who I owns what ecosystem for it's fast technology, are happening I side likeness But I've by anything be would a situations that the or think don't our et people copyrights on risk for the and what would

to on on the a out positive that of on I think, whole I on and put the and side. uncertainty, training I trying figure for huge positive definitely be I the think that the would ecosystem. One, trying been lot account don't could is But risk think there's to the potentially creativity of as that's for because a entire to as figure part side, I out highlighted think industry moment that the story. this for flip because

in on little detail this and I go record more bit talk podcasts. a in about the for

more that a perhaps think So really understanding that's listen of it short know when tools their of like something like bit sound software conges just sound it that pattern you're it. a to plug these instruct make production more or bit a to if interfaces, that allow now these it, something the conversational little you using create for know about some interested will or to anything voice, to into to mix a little to bit how if a music people even the about more. little music creating you're make be, upbeat, don't you the would with something play add complex a AI now drum But guys in software’s

then the growing the lead more which better augment that doing. And add humming and could should journey artists creative then and it into also and just that you it's have your DAW the And more music. existing meaningfully producers and that we is you someone that we alter and we it the benefits to is are growing something Spotify many sort but chance, engagement have to culturally, the that service great And even think by do. because the that of you has AI to creators out a the many music to music, creating it environment think, And more can helping imagine [ph], I revenue. software on backdrop that creators more obviously, music our opportunity the

perhaps of on upside, think I happen but products And their present would then, Spotify it's which there's talking could a entirely that, that to So on aren't be be of things lot have where moment. those potential can conduit own you users can people that early at types too the way a and of new speculate music creating perhaps of course, about.

Okay.

introducing talked year, you from last books. verticals At Rich podcast we more? looking to hear question new expect Greenfield. should audio and Another music, Investor three Day When beyond the about

Yes.

So this in moment. progressing three. candidates third to very there's of And of then earlier nicely few at out the that. that's there's the anything two in stage announce a pipeline, have than that's a of the But I bit don't obviously, little an

of we So the things again, in this at -- more hinting work. be have just that kind

ago opening on X, years are that or by I mentioned for the not to we three months announce projects months ago, many remarks, being something things we sometimes X working teams product this even of them but Spotify for at that prior of have ready worked X, these in six that's we is my are before started world. the we

those them. those now are of progressing have of good yet them are, a two what very three, to right not we announce So ready nicely, very sense

for ready they're when prime see we'll So time.

advertising have comparisons Okay. Question update trended year-on-year the backdrop? benefit you the Benjamin sales on us far from Black year an Shouldn't you from as How ad coming give so advertising. easing in on Could April? progresses?

So like on choppy well. will April, positive. feel and some coming we the there had we year, in yes, And so that's we ended second comps being QX part question, I of some out said, the which April, us. in up was terms That benefit the of do felt pretty being easier the March get as definitely of momentum and that throughout think momentum

-- I also optimistic there's would be So because we momentum the cautiously like think word some feel cautious right optimist think I there. but maybe we're

I cautiously macro we'll we're feel optimistic. But standpoint. caveat uncertainty, think positioned I about good think given where an the advertising on -- is we just

Okay.

timing profitability? Doug gross Another ad-supported meaningful inflection on to get see And we an margins? in Anmuth question Can on podcasting for podcasting. updated we from view expect should when a

Yes.

to change no we and have at Day we continue respect loss we to podcasting the the targets the So not the -- what continue loss get gave better Look, podcasting and think year breakeven see then Investor the to changed. profitability with we to said. throughout

about that. So we still feel good

And Podcasting X that. ad-supported impacting really big of margins, a there's gross which is about. that, then mean, that the factors are we've talked I part

lot. profitability and breakeven the as gross to ad-supported that turns obviously the a podcasting then margins loss will So help

developed more regions our advertising then quite do gross margins ads where are And markets in established of and where some have markets. some we they our in are

on those kind still developed getting of at And markets our so of ad we're parity some with more market. working

podcasting the transition but be to of a will two, and combination from obviously, a So profitability a from business help. the it's drag breakeven being the a big

All couple Doug on a more right. Anmuth looks operating like We've for got has And expenses. time it follow-up a questions.

the and that by we should social XX% key are severance. growth what roughly movements with the areas in that driven half leverage? had of How year-on-year in first expect of You And quarter charge OpEx to improve XXXX? throughout

a great question. Yes, it's

another for so was or then up. And so -- XXX it basis growth, and charges social the of points third a severance. from about and XX% Of thanks bringing that

about your that. yes, chunk big was OpEx the it came of a expense from to point, growth So

sort if you from look is basis, we see you'll think year-over-year no as our we're we changes we up in get start head throughout a I to those go the reduction to the an I'm year headcount guidance. this just count still a couple just had as a illustrative ago. months example, at throughout things. assuming of One, few comps in headcount, as lap easier the year, using changes of no assuming

year-over-year again, And is QX pretty gets it tough, and easier.

as little we leverage saw side. on you the we leverage where in grow reading then help the definitely will on a into less able we're quarter. we're not of marketing users and subs for pretty said, still Daniel and expected, after than had too some the And the that that QX, we're spent one So obviously side phenomenally. to bit how goes it's see something year. monitoring to But rest much that And

the increases? "win-win" favourable growth labels stock Jed a to seeing and price negotiate a this got We've this from the Kelly. If in from does strong question position a outcome on price MAU We're any continues, with gross Spotify Okay. place margins. incremental improving benefit

the with content that our partners. impacts know I think don't I negotiations Yes. stock our price

real I has impact. So think don't that any

very As when single a I it's before, issue. to that rare we're describe tried usually, negotiating outcomes, it's

that it's with agree a package negotiating we It's We tend on. them. -- different are usually to of things

of So kind treaties, calls can them things. to as bilateral negotiate you so while, almost a and for lot there's those into think a of one puts of have them and

of set different and to a of variables ready go there's So again, it's that sort into a we're whole And think I of discussions, number them. raise prices.

it do down to the ability that, have those I but negotiations. think comes really to we

our much in inventory to And anything discuss growth what backdrop, order on else? question come you be with going Could right. the availability, improving Maria a Ripps of today increased XXXX? engagement formats, emerging the advertising. rank advertiser of biggest function will macro from How last be investments the consider given drivers to you is All recent and/or or an greater advertising of

growth, lot and a lot there's think Look, advertising let's that there's it. kind to our I a of so question. Yes, unpack I in think

ahead talked some XXXX. some QX an we've throughout it some about, and expense sales I of growing that there. in So of of Europe of the We World. benefit in our about invested -- that capabilities talked benefit there's in and sort has Rest we and as the of been we regionally of And saw think of

made of we getting on So some investments that's the just one, last year people on side. some the leverage more

here, lead expect about, talking we better targeting. beyond. Two are throughout better would we're better attribution, and to keep improvements be, innovation XXXX see going technology those we that really as with measurement, And to

that be is well. will wild there as card. big as the So macro benefits And said, some from then the you

something macro that it's better so And to remains the and even a when hard outperform think continue when platform macro out and that strong can will predict that We really still the build it. uncertain. to gets benefit we be will

for Daniel to over session All Thanks, some closing our And now for that today. concludes to Maria. Q&A right. back And it I'm remarks. turn going

was that quarter continued high a outperformance, In on what accomplishing. thanks, continue with we're and consistently efforts better feel and I efficiency, long-term really But positioned phenomenal note, closed performance. are translate more approach our this a working. good out even closing, as we into on to importantly, a increased We is an these All Well, And quarter forward significant focus this XXXX we we innovation to Bryan. to are momentum. right. with that business about seeing move better

podcast later today. free again record usual, feel the out joining our, for So thank for check dropping you to And us. as

under on Thanks, website available also Spotify on everyone, replay And Spotify concludes call joining. replays. the call. Okay. for that our app earnings today's and be A will