Q4 2022 Update

January 31st, 2023

1

Table of Contents

Executive Summary

p.03

Key Highlights

p.04

Financial Summary

p.06

MAUs & Subscribers

p.13

Product & Platform

p.16

Outlookp.21

Financial Statements

p.24

2 2

Executive Summary

We ended 2022 with strong Q4 performance as nearly all of our KPIs surpassed guidance. MAU net additions reached a quarterly record-high of 33 million in Q4, 10 million above guidance. Subscriber growth also materially outperformed, exceeding guidance by 3 million net additions. Revenue growth, excluding the impact of changes in FX, was ahead of expectations. Gross Margin exceeded guidance by 80 bps due primarily to lower investment spending and broad-based music favorability. As expected, our Free Cash Flow was negative in the quarter; however, full year Free Cash Flow remained positive and we expect this trend to continue moving forward on a full year basis.

Looking back on 2022 in its entirety, we are pleased with our overall results. Each year presents certain challenges and opportunities and, over the past 12 months, we largely delivered on our internal goals and we are excited about the momentum we are building heading into 2023.

USER & FINANCIAL SUMMARY

Q4 2021

Q3 2022

Q4 2022

Y/Y

Q/Q

USERS (M)

Total Monthly Active Users ("MAUs")

406

456

489

20%

7%

Premium Subscribers

180

195

205

14%

5%

Ad-Supported MAUs

236

273

295

25%

8%

FINANCIALS (€M)

Premium

2,295

2,651

2,717

18%

2%

Ad-Supported

394

385

449

14%

17%

Total Revenue

2,689

3,036

3,166

18%

4%

Gross Profit

712

750

801

13%

7%

Gross Margin

26.5%

24.7%

25.3%

--

--

Operating (Loss)/Income

(7)

(228)

(231)

--

--

Operating Margin

(0.3%)

(7.5%)

(7.3%)

--

--

Net Cash Flows From Operating Activities

119

40

(70)

--

--

Free Cash Flow¹

103

35

(73)

--

--

  • Free Cash Flow is a non-IFRS measure. See "Use of Non-IFRS Measures" and "Reconciliation of IFRS to Non-IFRS Results" for additional information.

3

Key Highlights

Record high MAU growth of

18% Y/Y Revenue growth and

33 million net additions

25.3% Gross Margin

8th Annual Spotify Wrapped Campaign draws more than 150 million MAU

  • MAUs grew 20% Y/Y to 489 million, 10 million above guidance. Net additions of 33 million represented our largest ever Q4 growth
  • MAU strength led by Rest of World and Europe as a result of successful marketing campaigns and OEM strength
  • Premium Subscribers grew 14% Y/Y to 205 million, 3 million above guidance, aided by promotional intake and household plans
  • Total Revenue grew 18% Y/Y to €3.2 billion
  • Premium Revenue grew 18% Y/Y to €2.7 billion
  • Ad-SupportedRevenue grew 14% Y/Y to €449 million, led by Podcasting gains
  • Gross Margin finished above guidance at 25.3% primarily as a result of lower than expected spend on new podcast content investments and broad-based music favorability
  • Users engaging with the 8th annual year-end Spotify Wrapped campaign grew 30% Y/Y across 111 markets
  • Rolled out the first iterations of Google's User Choice Billing to Spotify subscribers in select markets
  • Announced the expansion of Audiobooks a la carte availability in United Kingdom, Ireland, Australia and New Zealand

4

Key Highlights: Actuals vs. Guidance

Users

Financials

Results

Monthly Active Users (M)

Above

Premium Subscribers (M)

Above

Results

Total Revenue (€B)

Inline

Gross Margin

Above

Operating (Loss)/Income (€M)

Above

Q4 2022 Actuals

Guidance

489

479

205

202

Q4 2022 Actuals

Guidance

€3.2

€3.2

25.3%

24.5%

(€ 231)

(€ 300)

5

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Spotify Technology SA published this content on 31 January 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 January 2023 22:07:01 UTC.