And I think when you look at already our 2022 results on both the MAU side, the improvements in the Gen Z, our audience, in Southeast Asia, those are showing that our products and platform is very, very favorable in the competitive marketplace. Spotify recently began testing a Friend's tab on the bottom strip of the app. ), Norman Quack's Chophouse closes its Stillwater location, Charley Walters: Way too early to judge Vikings' pick of Jordan Addison, 'Forever chemicals' exacerbate water issues in Lake Elmo, development still on pause, 'Smiley-face killer' theorist accused of St. Paul sex assault at time of Zamlen search, Do Not Sell/Share My Personal Information, Chief Innovation Officer Tarek Tomes, $160,000, Chief Equity Officer Toni Newborn, $127,000, Chief Resilience Officer Russ Stark, $108,000, Director of Intergovernmental RelationsThaomee Xiong, $108,000, Naomi Alemseged, constituent outreach coordinator, Ikram Koliso, outgoing policy associate, will be the new college savings account program manager, Noel Nix, deputy director of intergovernmental relations and community engagement, Joan Phillips, executive assistant to the mayor, Christine Rider, senior aide to the deputy mayor. I would now like to turn the call over to Bryan Goldberg, Head of Investor Relations. Bears point to Spotify's lack of gross margin expansion since IPO due to high dependence on record labels like Universal Music Group (AMS:UMG), lack of consistent operating profitability, and a management team that cares little about representing shareholder interests. In short, the main bear case for Spotify has always been that while it may be a good "product", it is not a good "business" or "investment". Continued investments to build out their podcast/audiobook digital infrastructure. We see a double-sided win-win here, which long term will translate into business opportunity. Given this predominant bear narrative, Spotify's gross margin is arguably their most anticipated financial metric when they report quarterly results. The important part is what's pretty amazing with our Spotify story is that this is something that creates win-wins with our label partners too. So, when you look at the core behavior, it may take longer in some developing markets than it does in mature markets, et cetera. But the strategy isn't to go compete with the ecosystem, but rather to enable the ecosystem. Recent estimates show that HBO Max and HBO combined have more than 40 million subscribers whereas Netflix has more than 200 million subscribers. Please disable your ad-blocker and refresh. A rigorous, hands-on program that prepares adaptive problem solvers for premier finance careers. And what is the projected path to contribution? Spotify, in a recent British regulatory filing, appointed Paul Vogel as a director, in anticipation of him replacing Barry McCarthy as the companys CFO early next year. Bulls point to Spotify's demonstrated track record of growing MAUs and premium subscribers, rave customer reviews (4.8/5 on the App Store from 23.6m reviews), excellent brand recognition, industry-leading churn rates, strong balance sheet, and a visionary CEO (Daniel Ek) who some have argued single-handedly rescued the music industry from potential extinction. We're not going to quantify the savings. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body. Next question from Rich Greenfield on audio books. So first off, we have great relationships with all of our music partners and are in constant dialogues with them about their performance and our performance in all the markets around the world. Our next question is going to come from Deepak on user choice billing. When Vogel joined Spotify in 2016, there were 1,500 employees. Given many of the adjustments we made at the start of 2023, including our decision to reduce our workforce by 6%, we see our operating expenses growing slower with a material improvement in our operating loss compared with 2022. And we broke out the various verticals where you would see that music have been making steady improvements, but obviously, our podcasting business had been a drag to our gross margin profile. This lack of consistent operating profitability is clearly testing the patience of some investors, particularly after Daniel Ek's recent guidance for 20% long-term operating margins at their 2022 investor day. Next question from Doug Anmuth, users and subscriber growth in '23. We said a number of times that 2022 is going to be an investment year. Melvin Carters Cabinet is most diverse in St. And with respect to churn, we don't obviously give those numbers out. How this CEO followed her curiosity to success, AI-boosted resumes increase the chance of being hired, Intel CEO on bringing chip manufacturing back to US. - Spotify CFO Paul Vogel, Q3 2022 Earnings Call. - Spotify CFO Paul Vogel, Q3 2022 Earnings Call. Wrapped was trending all over social media, but it wasn't just about Wrapped. So inevitably, you should expect our hurdle rate for new investments to be higher. An interdisciplinary program that combines engineering, management, and design, leading to a masters degree in engineering and management. Another question for Ben Black on ticketing. And while it's too early to provide any guidance with respect to 2023, we do expect our profitability rates to improve relative to 2022 as we grow revenue, lap certain investments and deploy capital more efficiently. Third, Spotify is currently in the midst of an "investment supercycle" with high R&D spend to build out new products (e.g., ad marketplace, live audio, podcasts, audiobooks), which should theoretically result in a better customer experience, leading to lower churn and higher pricing power. But the separate part is on the user side, the same is true as well. And as a result, now we have 5 million creators on Spotify, so a massive increase in the number of people who are creating podcasts, you being one of them. And some of them, not surprisingly, haven't worked out. A huge part of that, especially for the music audience is obviously touring. We'll start with opening comments from Daniel and Paul and afterwards, we'll be happy to answer your questions. The company invests heavily in research and development to improve that playlist experience an investment it hopes will deliver advantage in a highly competitive market. Next question comes from Mario Lu on operating income. This was a weak quarter for Spotify's revenue growth, which was masked by significant currency tailwinds. And then from there on, there will be opportunities for us to play as well. NASZYJNIKI ASTRA Z KAMIENIAMI URODZENIOWYMI - TERAZ -15% , Mokave totake rcznie robiona biuteria. A lot of the investments that we did in 2022 that were investments with no real sort of benefits to the revenue will start to hopefully bear fruit in '23 and beyond. We're going to continue to see Marketplace growth, which will help our music gross margin. Yes. I wrote this article myself, and it expresses my own opinions. I mean its early days on audio books. We think Q1 will be the low point in terms of gross margin for the year, with gross margin improving throughout 2023. To ensure this doesnt happen in the future, please enable Javascript and cookies in your browser. And now we're going to have to live up to that. Fifteen years ago, Spotify was founded as a go-to destination for music lovers, a place where users could stream whatever tunes they wanted without having to buy them. When Netflix was growing, people used to say, Well, how big can this company be? Vogel said. Since then, the Swedish company has watched its number of subscribers tick past 400 million as it expands into podcasting, live audio, and audio books. We've grown from 100 million users to almost 400 million users over a six-year period of time, Vogel said. So, we don't go through all of them. However, such a slowdown in ad-supported revenue is not isolated to Spotify but is rather a function of weakening What are some of the concessions you're looking for from the labels? As such, we expect another quarter of decelerating growth in Q4, but we continue to remain confident in the long-term potential of the [ad-supported] business. Indeed, Ek's central thesis for heavily investing to build a multi-product platform is that newer products (e.g., podcasts and audiobooks) do not have the same artificial gross margin constraints as their premium music revenue. The time to move is now, Digital transformation after the pandemic, Creating change through collaborative participation, allows users to see the lyrics to the songs theyre listening to, continued growth in the smartphone market. We've got another question from Doug Anmuth on marketing. Number of employees at City of St. Paul in year 2021 was 4,488. And obviously, I look forward to sharing more on Stream On, sort of wink-wink around all the updates that we're planning throughout the year as well that I think will mean a lot for both music and podcasting and beyond. Mokave tobiuteria rcznie robiona, biuteria artystyczna. I'll just once again want to reiterate my confidence in the business now as we're entering the next phase. I think some of these trends are very powerful and very good, I think, for consumers with more choice and more artists making their way. Reported results were aided by a 600-basis point currency benefit. And I'm really optimistic about the direction we're headed in, and we'll continue to focus my efforts on guiding the long-term success of the company. We want to have a billion users, Paul Vogel, Spotifys chief financial officer, told attendees at the 19th annual MIT Sloan CFO Summit last month. And so, it's been uncertain. And in hindsight, I probably got a little carried away and overinvested relative to the uncertainty we saw shaping up in the market. However, we continue to generate roughly $200 million in free cash flow on a trailing 12-month basis and we expect to be free cash flow positive for the full year of 2023. We have the same notion around podcasting. When combined with our increased focus on speed and efficiency, we are confident in our ability to continue our double-digit top line trajectory in conjunction with improvements in profitability. Highest salary at City of St. Paul in year 2021 was $207,127. And we had success with our holiday campaign, which we do every December and Wrapped was a huge success as well, sort of driving traffic to Spotify. As you move beyond the 2022 investment year, do you still expect gross margin to expand in 2023? In Q3, Spotify reported 20% YoY growth in total MAUs from 381m to 456m (vs. guidance of 450m) and 13% YoY growth in premium subscribers from 172m to 195m (vs. guidance of 194m). It was pretty broad-based across most of the divisions within Spotify. It was up again in Q3. But things change, and the macro environment has changed significantly in the last year. And then podcast consumption per podcast MAU is also up year-on-year. I still believe it was the right call to invest, and I would do it again. Can you share detail on investments that have impacted Premium gross margin? And by all accounts, it was extremely successful, if not more successful than we even thought. Now there are more than 6,000. Spotify's Q4 guidance for MAUs and premium subscribers was strong, forecasting 479m MAUs (+5% QoQ; +18% YoY) and 202m premium subscribers (+4% QoQ; +12% YoY). By the numbers: Spotify said that 25% of its total monthly active users engaged with podcast content in Q4, up from 22% in Q3 2020. And I'll let Paul fill in on more of the specific details. It is opening up the platform so that creators have as much choice as possible in choosing whatever options they want to do. This was 10 million ahead of guidance, up 33 million quarter-over-quarter and the largest Q4 net additions in our history. And that is a big shift, but it is also what we said during the Investor Day in June. However, we'll need to wait until next quarter for concrete guidance on margins. Next -- another question from Michael Morris. So, if you kind of take a step back and you look at sort of just advertising in Q4 overall, it's definitely continued to be very up and down. It is actually making real sort of material decision-making at the top. This 20-month MBA program equips experienced executives to enhance their impact on their organizations and the world. And that adds several benefits to Spotify. We look at all the trends, and we try and understand how big these things could go. Noting continued growth in the smartphone market, Vogel said it was reasonable to assume that streaming will continue to grow as well. So, it's early days, but positive. So, speed will come in having more decision-making and faster decision-making. MOKAVE Such R&D costs should naturally decrease once Spotify's recently launched products become more established and the heavy upfront product-related investments are complete. And we realized, again, as I mentioned in my comments around audio books that this was a nascent space that was growing, albeit still was under consumed to what we believe the potential was in the industry. So, I just wanted to add that context that, that's still very much on the top line for us that you should expect music to be meaningfully improving with things like Marketplace playing an important role. We've got a follow-up question. Yes, the podcast reaching breakeven within several years. So, it wasn't just that we took audience from another platform, but we actually grew the pie meaningfully for podcasters. While the company has historically had better revenue growth and better margins on the premium side, Vogel said, at least 60% of subscribers have come on board to Spotify by signing up first for a free subscription. To that end, Spotify continues to invest in its advertising business. Vogel had no idea where Spotify was headed that day it went public, but he hoped it was somewhere exciting. Gross margins continue to be the "Achilles' heel" for Spotify and came in at 24.7%, well below their internal guidance. In short, the main bear case for Spotify has always been that while it may be a good "product", it is not a good "business" or "investment". In Q3, Spotify reported an operating loss of 228m (vs. guidance for an operating loss of 218m), representing a negative 7.5% operating margin. And there wasn't really any specific area. Inventive. So, we expect that to be pretty significant. So that's still the plan. It was broad-based by product. I/we have a beneficial long position in the shares of SPOT either through stock ownership, options, or other derivatives. Until then, I'll likely pause adding to my position. I would say, in general, any time we're growing MAUs, the way we are, it's always a really good sign of the business, the health of the business and the health of the future subscriber growth for Spotify as well.