Q4 2023 Spotify Technology SA Earnings Call

Operator: Enigma An original series by Spotify Created by Julio Rojas Produced by Emisor Podcasting Starring Ana Valeria Becerril, Diego Klein, Ignacia Baeza, and lvaro Rodolfi Welcome to E55. What do we simply call it? 55 FABULOUS WORLD FABULOUS WORLD FABULOUS WORLD JAPANESE. In this program, we are looking forward Please check the description of the program and apply by e-mail.

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Operator: Now, we would like to send a heavenly kiss to everyone we love. This is Kyoko Kano. This is Mika Kano, www.spotify.com, OK. MUY BUENAS PINCHES NOCHES! Good morning and welcome to Spotify's fourth quarter 2023 earnings call and webcast. All participants are in a listen-only mode.

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Operator: If you require operator assistance at any time, please press star zero. As a reminder, this conference call is being recorded. I would now like to turn the call over to Bryan Goldberg, Head of Investor Relations. Thank you.

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Speaker Change: Good morning, and welcome to Spotify fourth quarter 2023 earnings call and webcast.

Bryan Daniel Goldberg: All right. Thanks, Operator, and welcome to Spotify's fourth quarter 2023 earnings conference call. Joining us today will be Daniel Ek, our CEO, Paul Vogel, our CFO, and Ben Kung, our VP of Financial Planning and Analysis, who's been assisting with the transition while we search for our new CFO. We'll start with opening comments from Daniel and Paul, and afterwards, we'll be happy to answer your questions. Questions can be submitted by going to slido.com, S-L-I-D-O.com, and using the code hashtag SpotifyEarningsQ423.

Speaker Change: All participants are in a listen only mode. If you require operator assistance at any time, Please press star zero.

Speaker Change: As a reminder, this conference call is being recorded.

Speaker Change: I would now like to turn the call over to Bryan Goldberg head of Investor Relations. Thank you. Please go ahead.

Bryan Daniel Goldberg: Alright, Thanks, operator, and welcome to Spotify as fourth quarter 2023 earnings conference call joining us today will be Daniel lack our CEO, Paul Vogel, our CFO and Dan Kong, our VP of financial planning and analysis, who has been assisting with the transition while we search for a new CFO will start with opening comments from Daniel and Paul and afterwards, we'll be happy to answer your questions.

Bryan Goldberg: Questions can be submitted by going to slide <unk> Dot Com S. L. I D O dot com and using the code hashtag Spotify earnings Q4 'twenty three.

Bryan Daniel Goldberg: Analysts can ask questions directly into Slido, and all participants can then vote on the questions they find the most relevant. If for some reason you don't have access to Slido, you can email investorrelations at ir at spotify.com, and we'll add your question. Before we begin, let me quickly cover the Safe Harbor. During this call, we'll be making certain forward-looking statements, including projections or estimates about the future performance of the company. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results can materially differ because of factors discussed on today's call, in our shareholder deck, and in filings with the Securities and Exchange Commission. During this call, we'll also refer to certain non-IFRS financial measures. Reconciliations between our IFRS and non-IFRS financial measures can be found in our shareholder deck, in the financial section of our investor relations website, and also provided today on Form 6K. And with that, I'll turn it over to Daniel. All right.

Bryan Goldberg: Analysts can ask questions directly into slide open all participants can then vote on the questions. They find the most relevant if for some reason you don't have access to this lateral you can email investor relations at IR at Spotify Dot Com and we will add in your question.

Bryan Goldberg: Before we begin let me quickly cover the safe Harbor.

Bryan Goldberg: During this call will be making certain forward looking statements, including projections or estimates about the future performance of the company. These statements are based on current expectations and assumptions that are subject to risks and uncertainties actual results could materially differ because of factors discussed on today's call in our shareholder deck and in filings with the Securities and Exchange Commission. During this call. We'll also refer to certain non <unk>.

Bryan Goldberg: <unk> financial measures reconciliations between our ifr S or non <unk> financial measures can be found in our shareholder deck in the financial section of our Investor Relations website and also furnished today on form 6K, and with that I'll turn it over to Daniel.

Daniel Ek: Thanks, Bryan, and hey, everyone, and thanks for joining us. I hope you've had the opportunity to review our shareholder deck to get a sense of what an incredible year 2023 was for Spotify. Throughout the year, we notched some really significant milestones and set numerous records. This included 113 million net ads on the MEU side and premium net ads of 31 million, both the biggest full-year additions in our history.

Daniel Ek: Alright, Thanks, Brian and Hey, everyone and thanks for joining us I hope you've had the opportunity to review our shareholder deck to get a sense of what an incredible year 2023 wells for Spotify.

Daniel: Throughout the year, we notched some really significant milestones and set numerous records. This included 113 million net adds on the MCU side and premium net adds of 31 million. Both the biggest full year additions in our history and our annual wrapped experience also toppled previous levels of engagement.

Daniel Ek: Our annual WRAP experience also surpassed previous levels of engagement, surpassing 2022 numbers in just the first 31 hours of the campaign. We accomplished all of this by significantly exceeding our own expectations when we entered the year and against the backdrop of global turmoil and uncertainty, and Q4 was a continuation of this story. And while I'm pleased with the level of growth we saw in 2023, perhaps what is even more gratifying is that it also marked a very different year for Spotify, a true evolution in how we operate our company. A year where we started to prove that we're not just a company that has an amazing product but one that is also building a great business. And there's no question that we had to make some difficult decisions to put us on track to achieve our goal of being a consistently profitable company. But by taking these steps, I'm super confident in where we're headed.

Daniel: Surpassing 2022 numbers in just the first 31 hours of the campaign.

Daniel: We accomplished all of this by significantly exceeding our own expectations. When we entered the year and against the backdrop of global turmoil and uncertainty in Q4 was a continuation of the story.

Daniel: And while I'm pleased with the level of growth. We saw in 2023, perhaps what is even more gratifying is that it also marked a very different year for Spotify, a true evolution in how we operate our company a year, where we started to prove that we're not just a company that has an amazing product, but one that also is building a great business and there's no question that.

Daniel: We had to make some difficult decisions to put us on track to achieve our goal of being a consistently profitable company, but by taking these steps I'm Super confident in where we're heading.

Daniel Ek: So looking to 2024, you should expect a continuation of what you saw in 2023, strong product development which leads to strong growth, but with an increased focus on monetization and efficiency, which in turn drives profitability. And I know some of you may start to wonder if we're sacrificing growth for profitability. Long-term, we believe that the real value of Spotify is in solving problems at the intersection between creators and conservers. With scale, there will be even more opportunities to do so. Therefore, growth is still the most important thing we can deliver. However, equally true is that our hurdle rate for investment has increased. So what gives?

Daniel: So looking to 2024, you should expect a continuation of what you saw in 2023 strong product development, which leads to the strong growth, but with an increased focus on monetization and efficiency, which in turn drives profitability.

Daniel: And I know some of you may start to wonder if we're sacrificing growth for profitability long term, we believe that the real value of Spotify isn't solving problems at the intersection between creators and consumers with scale there will be even more opportunities to do so therefore growth is still the most important thing we can delay.

Daniel: Ever however, equally true is that our hurdle rate for investment has increased so what gifts well as I've shared before we have various levers to pull at different times to drive revenue growth. These include growing our users, creating new businesses with new revenue streams and increasing revenue per user.

Daniel Ek: Well, as I've shared before, we have various levers to pull at different times to drive revenue growth. These include growing our users, creating new businesses with new revenue streams, and increasing revenue per user through price increases. In 2023, we leveraged all three throughout the year at various times, but this won't always be the case. You should expect to see a shift back and forth between prioritizing these three key elements based on a variety of considerations.

Daniel: Through price increases in 2023, we leveraged all three throughout the year at various times, but this won't always be the case, you should expect to see a shift back and forth. Among prioritizing. These three key elements based on a variety of considerations and looking ahead I believe 2024, it's going to be.

Daniel Ek: And looking ahead, I believe 2024 is going to be another year of solid progress led by an acceleration of revenue growth. That said, I think it is important to remind investors that we constantly modulate between what we spend most of our time focusing on. For some years, it's focusing on growing the top of the funnel, and for some years, it's about driving monetization of those users. The last few years have been extraordinary from the top of the funnel perspective.

Daniel: Another year of solid progress led by an acceleration of revenue growth.

Daniel: That said I think it is important to remind investors that we constantly modulate between what we spend most of our time focusing on in some years, it's focusing on growing the top of the funnel and in some years, it's about driving monetization of those users. The last few years has been extraordinary from the top of the funnel perspective, our aim is the <unk>.

Daniel Ek: Our aim is to continue this trend, but our focus in 2024 will be more on how we monetize that growth. I also wanted to provide a quick update on our audiobooks business, which is performing well, and we are very excited about its potential. It's still early days, but the feedback from listeners and from the industry is extremely encouraging. Data shows that our entry into this market has dramatically accelerated its overall growth. In Q4, we became the number 2 provider of audiobooks behind Audible, which is notable given how entrenched the legacy players are.

Daniel: This trend, but our focus in 2024 is more on how we monetize that growth.

I also wanted to provide a quick update on our audio books business, which is performing well and we are very excited about its potential is still early days, but the feedback from listeners and from the industry is extremely encouraging data shows that our entry into this market has dramatically accelerated its overall growth in Q4.

Daniel: We became the number two provider of audio books behind audible, which is notable given how entrenched the legacy players are.

Daniel Ek: And this is exactly what we set out to do, grow the pie for the publishing industry and expand the interest in audiobooks to an entirely new set of listeners. More to come as this takes hold and we roll it out to additional markets. Before I turn it over to Paul to provide more details on the numbers, I also wanted to take this opportunity with all of you on the line to thank him and wish him well. Although Paul is sticking around for a couple more months, this will be his last earnings call. He's been a great partner and helped to solidify the position of strength that we sit in today. So, thank you, Paul, for these years.

Daniel: And this is exactly what we set out to do grow the pie for the publishing industry and expand the interest in audiobooks to an entirely new set of listeners more to come as this takes hold and we roll it out to additional markets.

Speaker Change: Before I turn it over to Paul to provide more details on the numbers I also wanted to take this opportunity with all of you on the line to thank him and wish him well, although Paul Paul is sticking around for a couple of more months. This will be his last earnings call. He's been a great partner and helped to solidify the position of the strength that we sit in today. So thank you Paul.

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Daniel Ek: I also wanted to give you a quick update on our CFO search. We are well underway, and I'm happy with the caliber of the candidates that I'm seeing. As we enter this next phase of focusing on both a great product and building a great business, I'm confident we will find the right person. Someone who is passionate about driving the levels of efficiency and resourcefulness that are critical to our long-term success. Paul, thanks again, and over to you.

Speaker Change: I also wanted to give you a quick update on our CFO search we are well underway and I'm happy with the caliber of the candidates that I'm seeing as we enter this next phase of focusing on having both a great product and building a great business I am confident we will find the right person.

Speaker Change: Someone who is passionate about driving the levels of efficiency and resourcefulness that are critical to our long term success.

Speaker Change: Paul Thanks, again and over to you.

Paul Vogel: Great. Thanks, Daniel. And thanks, everyone, for joining us. I'd like to add a bit more color on the quarter and then touch upon the broader performance of the business and our outlook. Q4 was a very strong quarter. MAU grew by 28 million to 602 million, and we added 10 million net subscribers, finishing at 236 million. Both MAU and subscriber growth continue to be above our historical trend and outperformed forecast. Revenue grew 16% year-over-year to $3.7 billion during the quarter.

Paul Vogel: Thanks, Daniel and thanks, everyone for joining us I'd like to add a bit more color on the quarter and then touch upon the broader performance of the business and our outlook.

Paul Vogel: Q4 is a very strong quarter <unk> grew by $28 million to $602 million and we added 10 million net subscribers, finishing at $236 million with Mou with subscriber growth continued to be above our historical trend and outperformed forecast.

Paul Vogel: Revenue grew 16% year over year to $3 7 billion during the quarter.

Paul Vogel: Excluding the effects of unfavorable currency movements, revenue grew 20% year-on-year, representing an acceleration of 300 basis points versus the prior quarter's result due to the ongoing effects of the new subscription price. Turning to gross margin, gross margin of 26.7% was above guidance by about 10 basis points, due primarily to favorability in our podcast business. We reported an operating loss of $75 million, which was better than guidance due mainly to lower than expected marketing spend and personnel and related costs.

Paul Vogel: Feeling the effects of unfavorable currency movements revenue grew 20% year on year, representing an acceleration of 300 basis points versus the prior quarter as a result due to the ongoing effects of the new subscription pricing.

Paul Vogel: Turning to gross margin gross margin of 26, 7% was above guidance by about 10 basis points due primarily to favorability in our podcast business.

We reported an operating loss of $75 million, which was better than guidance due mainly to lower than expected marketing spend and personnel and related costs.

Paul Vogel: As we previously disclosed, our operating loss was impacted by about 143 million charges related to the efficiency actions we announced in December. Excluding the one-time charges, we generated $68 million of adjusted operating profit, which is more than double the third quarter as the business continued its early stage of inflection towards sustainable growth and profitability. Finally, free cash flow was positive $396 million in Q4.

Paul Vogel: As we previously disclosed our operating loss was impacted by about $143 million or charges related to the efficiency actions, we announced in December <unk>.

Paul Vogel: Excluding the onetime charges, we generated $68 million of adjusted operating profit, which is more than double the third quarter as the business continued its early stage of inflection towards sustainable growth and profitability.

Paul Vogel: Finally free cash flow was positive $396 million in Q4, while some of this strength was timing related we remain confident that we've entered a new chapter in terms of expanding the business. The business is cash generation potential.

Paul Vogel: While some of this strength was timing-related, we remain confident that we've entered a new chapter in terms of expanding the business and the business' cash generation potential. Looking ahead to the first quarter guidance, we are forecasting 618 million MAU, an increase of 16 million from Q4, and 230 million subscribers, an increase of 3 million over Q4. We're also forecasting a currency-neutral revenue growth rate of 20% plus year-on-year, pointing to $3.6 billion in total revenue. We also anticipate a gross margin of 26.4% and an operating profit of $180 million.

Paul Vogel: Okay.

Paul Vogel: Looking ahead to the first quarter guidance, we are forecasting 618 million Mou an increase of 16 million from Q4, and 230 million subscribers, an increase of 3 million over Q4.

Paul Vogel: We're also forecasting a currency neutral revenue growth rate of 20% plus year on year, turning to $3 6 billion. In total revenue. We also anticipate a gross margin of 26, 4% and an operating profit of $180 million.

Paul Vogel: While we no longer give full-year guidance, we do expect healthy full-year 2024 user growth that should be close to the average of the last few years, and we expect strong subscriber growth as well. Gross Margin and Operating Margin are both expected to improve throughout the year to deliver meaningful full-year expansion, with Podcasting expected to deliver positive gross profit for the year. We also expect our free cash flow generation to meaningfully exceed what we generated in 2023. And finally, as Bryan mentioned, Ben Kung, who has been a trusted partner of mine in finance, is also on the call and will be joining us for Q&A. Additionally, I'd like to thank Daniel and all of my colleagues over the past eight years for making my time at Spotify truly special. And with that, I'll hand things back to Bryan for Q&A. All right, thanks, Paul.

Paul Vogel: We no longer give full year guidance, we do expect healthy full year 2020 for user growth that should be close to the average of the last few years and we expect strong subscriber growth.

Paul Vogel: <unk> growth as well.

Paul Vogel: Gross margin operating margin are both expected to improve throughout the year to deliver meaningful full year expansion with part with podcasts and you expect it to deliver positive gross profit for the year.

Paul Vogel: We also expect our free cash flow generation to meaningfully exceed what we generated in 2023.

Paul Vogel: And finally, as Brian mentioned, Ben <unk>, who has been a trusted partner of minded finance is also on the call and joining us for Q&A and Additionally, I would like to thank Daniel and all of my colleagues over the past eight years for making my time at Spotify truly special.

Paul Vogel: And with that ill hand things back to Brian for Q&A Alright.

Daniel Ek: Again, if you've got any questions, please go to slido.com using the hashtag SpotifyEarningsQ423. We're going to be reading the questions in the order they appear in the queue. With respect to how people vote up their preference for questions and our... First question is going to come today from Doug Ameth on podcasts. Have podcasts flipped into positive gross profit yet? And how do you think about inflection here through 24 as you're rationalizing content spending? Yeah, so to level set with everyone, I think when we had our investor day last year, everyone was probably expecting our podcast business to be a net adder to the business and probably thought that the music margins were worse than what they ended up being.

Brian: Alright, Thanks, Paul again, if you've got any questions. Please go to slide <unk> Dot Com hashtag Spotify earnings Q4, 'twenty three we're going to be reading the questions in the order they appear in the queue with respect to help people vote up their preference for questions and our.

Brian: First question is going to come today from Doug Anmuth excuse me on podcasting.

Doug Anmuth: Have podcast flipped into positive gross profit yet and how do you think about inflection here through 'twenty four as you're rationalizing content spending.

Doug Anmuth: Yes.

Doug Anmuth: This one Doug.

Doug Anmuth: Yes, so I think just to level set with everyone. I think when we had our investor day last year, everyone was probably expecting our podcast business to be a net adder to the business and probably thought that the music margins was worse.

Doug Anmuth: Then what they ended up being and obviously as we outlined then.

Daniel Ek: And obviously, as we outlined then, podcasting was a drag on the business but something we were committed to turning around, and I'm pleased to say in Q4 we were very close to breaking even on that business, which gives me a lot of confidence that as we get into 2024, we will achieve the full year profitability target on podcasting. And so, when you think about them, what are the drivers for that to happen? Well, it's really two drivers.

Doug Anmuth: <unk> was a drag to the business, but something we were committed to turnaround and I am pleased to say in Q4, we were very close to breakeven on that business, which.

Doug Anmuth: Gives me a lot of confidence that as we get into 2024, we will achieve the full year profitability target on.

Doug Anmuth: Podcasting and so when you think about then what are the drivers for that to happen well, it's really two drivers on the topline side, we're still seeing healthy growth on engagements that engagement and turns it means there'll be more opportunities for us to monetize.

Daniel Ek: On the top line side, we're still seeing healthy growth in engagement. That engagement, in turn, means there will be more opportunities for us to monetize those engagement hours, and that's the top line. And then on the bottom line, we have doubled down on the deals that worked, and we've really, throughout 2023, gotten out of a lot of the deals that didn't work. And that's the result you're now seeing with the close to break even, and that will then lead to a positive podcasting business in 2024. All right, our next question is going to come from Michael Morris on margins.

Doug Anmuth: Those engagement hours.

Doug Anmuth: And that's the top line and then on the bottom line, we have doubled down on the deals that worked and we've got really throughout 2023 gotten out of a lot of the deals that didn't work and that's the resolved youre now seeing with the close to breakeven and that then will lead to a positive podcasting business in 2024.

Doug Anmuth: Alright. Our next question is going to come from Michael Morris.

Michael Morris: On margins what are the most impactful steps that will help you progress towards your long term music gross margin goal of 30% to 35% and can you share more detail on the gross margin levers in 2024, and the relative impact you anticipate from each.

Daniel Ek: What are the most impactful steps that will help you progress toward your long-term music gross margin goal of 30 to 35 percent? And can you share more detail on the gross margin levers in 2024 and the relative impact you anticipate from each? Progress on the new, a lot in the growth of our market, as we continue to focus on driving adoption of those and adding value to our label partners and therefore sort of building upon the progress that we've already made to date in that area. In terms of 2024, I think you've called out some of the key levers with respect to your comment on Q1. Really, the story of 2024, I think, can be broken into sort of these three parts.

Michael Morris: Great question Michael.

Michael Morris: In terms of the progress on the music margin goals, we see a lot of potential in the growth of our marketplace products as we continue to focus on driving adoption of those and adding value to our label partners.

Speaker Change: And therefore sort of building upon the progress that we've already made to date in that area in terms of 2024, I think you've called out some of the key levers.

Speaker Change: With respect to your comment on Q1 really the story of 2024, I think can be broken into sort of these three parts. It's a continuation of the journey on profitability in podcasting, it's the continuation of marketplace growth as I mentioned and also just gaining greater efficiency and leverage in our other cost of revenue areas, such as cloud costumes and streaming delivery.

Daniel Ek: It's the continuation of the journey on profitability and podcasting. It's the continuation of marketplace growth, as I mentioned, and also just gaining greater efficiency and leverage in our other cost of revenue areas, such as cloud costs and streaming delivery. We think all three have an equal part importance to the story in 2024.

Speaker Change: <unk>, we think all three of our equal parts importance to the story in 2024, and so we're looking forward to building on that progress there.

Paul Vogel: And so we're looking forward to building on that progress there. Okay, we've got a question now from Rich Greenfield on advertising. With advertising revenues still under 14% of your revenues, I'm surprised to see it's not growing faster than subscription revenue. How do you accelerate advertising growth to reach your goals of it becoming 20% plus of your overall revenue? Yeah, I'd say a couple things here.

Speaker Change: Yeah.

Speaker Change: Okay I've got a question now from rich Greenfield on advertising with advertising revenues still under 14% of your revenues I'm surprised to see it's not growing faster than subscription revenue, how do you accelerate advertising growth to reach your goals of it becoming 20% plus of your overall revenues.

Speaker Change: Yes, I'd say a couple of things here. So first I think we're very pleased with all advertising is growing obviously the market lot.

Paul Vogel: So first, I think we're very pleased with how advertising is growing. Obviously, the market, in a lot of ways, continues to be choppy, but you know, our FX-neutral high teens growth on the advertising side is really strong and really strong relative to the industry overall. So we feel good about the advertising growth. That's number one.

Speaker Change: A lot of waste continues to be choppy, but our FX neutral high teens growth on the advertising side. We think is really strong really strong relative to the industry. Overall, so we feel good about kind of the advertising growth. That's number one number two is we've obviously seen on the subscriber side it faster growth on subscribers in general plus we've had a price increase and so just the overall growth.

Daniel Ek: Number two is, we've obviously seen on the subscriber side faster growth among subscribers in general, plus we've had a price increase. And so just the overall growth on the premium side has probably been even faster than maybe we would have thought and others would have thought when you factor in both the outside subscriber growth and the price increase. And the last thing I'd also just remind you of is that the advertising business does get impacted more significantly by FX than the premium business. And so when you're thinking about just reported numbers, that also has an impact on sort of the progression. But I think we feel really good about both sides of the businesses right now. So, you know, everything's progressing as planned.

Speaker Change: And then on the premium side has probably been even faster than.

Speaker Change: Maybe we would have thought and other sort of thought when you factor in both the outside subscriber growth and the price increase and the last thing I'd also just remind you of.

Speaker Change: The advertising business does get impacted more significantly by FX than the premium business and so when youre thinking about just reported numbers that also has an impact on sort of the progression, but I think we feel really good about both sides of the business is right now so.

Speaker Change: Is progressing as planned.

Daniel Ek: All right, we've got a follow-up from Rich Greenfield on podcasting. How should we think about the revenue opportunity and gross margin impact of shifting from an exclusive podcast like Call Her Daddy or Joe Rogan to a non-exclusive? Yeah Rich, so I think to kind of up-level and talk about it generally and remind people, so when we walked into podcasting, we actually went in with multiple strategies at once. We did exclusives that you're referencing too, but we also did our own and original programming, and we also did licensed non-exclusive deals too. And what we said at the time, I think many people mostly sort of made a reference to thinking that this was an all-out exclusive effort similar to that of Netflix, but we said we take a much more of an opportunity approach to the strategy, and we're going to try many different things. And for some shows, exclusives may matter; for some others, they don't.

Speaker Change: Alright, we have got a follow up from rich Greenfield on podcasting, how should we think about the revenue opportunity in gross margin impact of shifting from an exclusive podcasts like call her daddy or Joe Rogan to nonexclusive.

Rich Greenfield: Yeah rich.

Rich Greenfield: I think to kind of up level and talk about it generally and remind people so when we.

Rich Greenfield: Walked into podcasting, we actually went in with multiple strategies of months weighted exclusives that you are referencing too, but we also did.

Rich Greenfield: Our own and original programming and we also did licensed nonexclusive deals too.

Rich Greenfield: What we said at the time I think many people, mostly sort of made a reference to thinking that this was an all out exclusive efforts similar to that of Netflix, but we said we would take much more of an opportunity approach to the strategy and we're going to try many different things and for some shows exclusives made matters for some other.

Daniel Ek: So I think the general story, just to be candid here with all of you on the line, is that while exclusivities were net positive on the side, they're not driving as much as the opportunity that we see on the ad side. And so by broadening distribution, we think we can accomplish a number of different goals. Most notable among them, we are going to be more aligned with the creator. The creator obviously wants to be on many different platforms and wants to have as big of an audience as possible. So that's why it's important.

Rich Greenfield: It don't so I think the general story just to be.

Rich Greenfield: Candid here with all of you on the line is that what we've seen is that while exclusivity. We're net positive on the side its not driving as much as the opportunity that we see on the AD side and so by broadening distribution. We think we can accomplish a number of different goals.

Rich Greenfield: Most notable among them, we are going to be more aligned with the crater the crater obviously wants to be on many different platforms and wants to have as big of an audience as possible.

Rich Greenfield: So that's important and then the second part is when you think about the revenue growth story on advertising. We are very excited with what we've been seeing.

Daniel Ek: And then the second part is when you think about the revenue growth story on advertising, we're very excited about what we've been seeing in early 2023 with these new types of deals that we've been structuring because we really have become aligned with the creator. And long term, that is the reason why I started Spotify. We care equally about consumers, and we care equally about creators. So I feel like with this new strategy, we're actually even better aligned with the creators because we're not asking the creator to trade one for the other. And because advertising is in such a strong growth position for us, I feel really excited about the opportunity. We can bring both the creators and Spotify itself to life with that strategy.

Rich Greenfield: In early 2023 with these new types of deals that we've been structuring because we really become aligned with the creator and long term that is the reason why I started Spotify, we care equally about consumers and we can't care equally about creators. So I feel like with this new strategy, we are actually even better aligned with the <unk>.

Rich Greenfield: Greater because we're not asking the crater to trade one for the other and because advertising is and has such a strong growth position for us I feel I'm really excited about the opportunity we can bring both the creators and to Spotify itself with that strategy.

Daniel Ek: Okay, our next question comes from Zach Morrissey on Marketplace. Can you provide an update on Marketplace and how that performed in 2023? And how should we think about momentum into 24?

Rich Greenfield: Okay. Our next question comes from Zach Morrissey on marketplace can you provide an update on marketplace and how that performed in 2023, and how should we think about momentum into <unk> 'twenty four.

Daniel Ek: Yeah, Marketplace performed really well in 2023. The growth rate, basically the contribution to gross profit, grew at similar rates to 2022, so really strong growth in 2023. And then just to reiterate what Ben said earlier about overall gross margin, you know, when you think about the improvements in gross margin moving to 2024, Marketplace will be a key contributor again along with, you know, the podcasting flip and some of the other costs of revenue. Okay, we've got a follow-up from Zach.

Zach Morrissey: Yes marketplace performed really well in 'twenty three.

Speaker Change: Yes, the growth rate is basically the contribution to gross profit grew at similar rates to 2022, so really strong growth in 'twenty three and then just to reiterate what Ben said prior about overall gross margin. When you think about the improvements in gross margin moving into 2020 for marketplace will be a key contributor again, along with the podcast.

Speaker Change: The flip in some of the other cost of revenue.

Speaker Change: Okay, We've got a follow up from Zach.

Daniel Ek: You saw strong subscriber growth and marketing leverage in 2023. How are you thinking about marketing spend in 2024? And do you see more room for further efficiency?

Zach Morrissey: You saw strong subscriber growth and marketing leverage in 2023, how are you thinking about marketing spend in 2024 and do you see more room for further efficiencies.

Daniel Ek: Yeah, and just as a reminder to everyone, this is something I talked about, I believe, during the Q1 earnings call in 2023, where I was positively surprised by some of the efficiencies we were seeing in still sort of healthy top-line growth. And that trend has been continuing for much of 2023. And the reality is, we don't know how far that will go.

Speaker Change: Yeah, and just as a reminder to everyone. This is something I talked about I believe during the Q1 earnings call in 2023, where I was positively surprised.

Speaker Change: In some of the efficiencies, we were seeing and still sort of healthy topline growth and that trend has been continuing for much of 2023 and the reality is we don't know how far that will go I feel good about it.

Daniel Ek: I feel good about the efficiencies we're seeing so far. The big concern always when you're making these things is, you may see some healthy, positive responses in the short term, but then, long term, are you impacting the brand? So we're always going to modulate towards that. But I think what we've been seeing so far has just been pure efficiencies, and quite great ones. And I expect there's still some, but the question is, still internally, we're still debating how much.

Speaker Change: The efficiencies, we're seeing so far.

Speaker Change: The big concern always when you're making these things as you.

Speaker Change: You may see some healthy positive responses intra quarter, but then long term are you impacting the brand. So we're always going to modulate towards that but but I think what we've been seeing so far has just been pure efficiencies.

Speaker Change: Quite great ones and I expect that there's still some but the question is still internally, we're still debating how much is the most important thing for us as I said is long term growth still for the company and so that's what we will optimize for and I think youre going to see us modulate between the quarter. Some quarters, we may spend a little bit more on.

Daniel Ek: The most important thing for us, as I said, is long-term growth for the company. So that's what we will optimize for. And I think you're going to see us modulate between the quarters; some quarters, we may spend a little bit more on some less. The most important metric for all of you, though, is to think about the LTV to SAC.

Speaker Change: Some less the most important metric for all of you, though is to think about the LTV to Sac we referenced this before.

Daniel Ek: We referenced this before; it was in 2022 and 2023, going down the efficiency on some of our spend. Now you're going to see a higher hurdle rate. So we're going to be a lot more diligent as we think about these marketing investments overall. But the spending per quarter may be more opportunistic, and you should think about it as such. But if you see a strong LTV to SAC, why wouldn't you?

Speaker Change: It had been in 2022, and 'twenty, three and three going down the efficiency on some of our spend now youre going to see.

Speaker Change: Higher hurdle rates, so we're going to be a lot more diligent as we're thinking about these marketing investments overall, but the spending per quarter per quarter may be.

Speaker Change: Be more opportunistic and you should think about it as such.

Speaker Change: But if you see a strong LTV to Sac why wouldn't you.

Daniel Ek: And that's the approach we take. Our next question is going to come from Eric Sheridan on operating priorities. Following your fourth quarter restructuring, what's your updated view about balancing long-term growth investments and Accelerating the Pathway to Long-Term Margin Targets in the Next Few Years and or Optimizing Internal Efficiency on an Annualized Basis? I'll start and then Paul or Ben, if you want to chime in on that.

Speaker Change: And that's the approach we take.

Speaker Change: Okay. Our next question is going to come from Eric Sheridan on operating priorities. Following your fourth quarter restructuring, what's your updated view about balancing long term growth investments.

Eric Sheridan: Accelerating the pathway to long term margin targets in the next few years.

Eric Sheridan: And or optimizing internal efficiency on an annualized basis.

Speaker Change: Yeah, I'll start and then Paul or Ben if you want to chime in on that.

Daniel Ek: Yeah, I mean, I talked about it in my introductory remarks, but it is a new way for us to operate as a company. One where we're consistently thinking about efficiency all the time. Top line.

Speaker Change: Yes, I mean.

Speaker Change: I really talked about it in my introductory remarks, but it is a new way for us to operate as a company one where we're consistently thinking about efficiency. All the time topline we started doing it in early 2023, and I think we are gradually becoming better quarter by quarter and I think investors should expect the same.

Daniel Ek: We started doing it in early 2023, and I think we are gradually becoming better quarter by quarter. And I think investors should expect the same much for 2024. We are going to continuously look at being more resourceful with the resources we have. That's just the new modus operandi that we have. But that said, that obviously leads to a concern then. OK, well, are we doing that to sacrifice at the expense of growth? And the answer should be, of course, not at all.

Speaker Change: <unk> for 2024, we are going to continuously look at being more resourceful with the resources we have.

Speaker Change: That's just the new modus operandi that we have but that said.

Speaker Change: That obviously leads to a concern then okay well are we doing that to sacrifice at the expense of growth and the answer should be of course, not that's not at all what we want to do.

Daniel Ek: That's not at all what we want to do. We still care about long-term growth because we believe that's where we're going to be able to solve real and meaningful problems for consumers and creators alike at scale. So that's our real focus. But it's a constant balancing act.

Speaker Change: We still care about long term growth because we believe that's where we're going to be able to solve real and meaningful problems for consumers and creators alike with scale.

Speaker Change: So that's our real focus, but it's a constant balancing act and I think what youre seeing us rather than sort of growth at all costs or growth growth growth youre going to see is quarter by quarter optimizing at various parts of that funnel, sometimes its topline growth sometimes its bottom line as a general trend we had healthy top line growth in 2023.

Daniel Ek: And I think what you're seeing us do, rather than sort of growth at all costs or growth, growth, growth, you're going to see us, quarter by quarter, optimizing at various parts of that funnel. Sometimes it's top line growth, sometimes it's bottom line. As a general trend, we had healthy top-line growth in 2023. 2024 is about monetizing more of that top-line growth. That's the general trend, but you'll see in various geographies, we may have just MEU growth as the goal. And in some others, it may be more of a just ARPU approach, as an example.

Speaker Change: <unk> 2024 is about monetizing more of that top line growth.

Speaker Change: That's the general trend, but you'll see in various geographies. We may have just <unk> growth is the goal and some others that may be more of a.

Daniel Ek: I would just add, I think, to everything Daniel said, if you think about, you know, the free cash flow and the acceleration of free cash flow and the better profitability, it just gives the business so much more optionality in terms of what it can do moving forward. And so, you know, I think you've seen that sort of inflection on the free cash flow side. You've now seen us, on an adjusted basis, profitable for two quarters in a row, with the forecast again for Q1 of next year. And so all that just puts the business in a much better place for the team to have the optionality to invest in areas that really make sense for the long term. Okay, our next question is going to come from Rich Greenfield on audiobooks. What surprises you most about the current state of the audiobook market? Yeah, Rich, I think it's two parts of focus.

Speaker Change: Just harpoon approach as an example.

Speaker Change: I would just add I think.

Speaker Change: So everything Daniel said, if you think about that.

Speaker Change: Free cash flow and the acceleration of free cash flow in the better profitability. It just gives the business. So much more optionality in terms of what it can do moving forward and so.

Speaker Change: I think you've seen that sort of inflection on the free cash flow side, you've now seen us on adjusted basis profitable for two quarters in a row with a forecast again for for Q1 of next year and so all of that just puts the business at a much better place.

Speaker Change: For the team that the optionality to invest in areas that really makes sense for the long term.

Speaker Change: Okay. Our next question is going to come from rich Greenfield on audio books, what surprises you most about the current state of the auto book market.

Rich Greenfield: Yeah, Rich I think its.

It's two parts of focus so I think on our side.

Daniel Ek: So I think on our side, the intriguing part is that we're able to bring a whole new audience to audiobooks. So, internally and externally, I think the biggest surprise has been the type of titles that resonate with consumers. These are not the normal titles that traditionally do well on Spotify, and that's pleasing to see because that means we're bringing a whole new audience to audiobooks, which is great to see.

Rich Greenfield: The intriguing part as we are able to bring a whole new audience to audio books.

Rich Greenfield: So internally.

Rich Greenfield: And externally I think the biggest surprise has been the type of titles that resonate with consumers. These are not the normal titles.

Rich Greenfield: Traditionally, thus well do well on Spotify, and that's pleasing to see because that means we're bringing a whole new market.

Rich Greenfield: Audience to audio books, the format, which is great to see.

Daniel Ek: And then, I think overall, I'm just happy to see that the partners we have on the publisher side and the author side are just very excited about the innovation we're bringing and very open-minded to trying new things. And this is an industry that's so important, I think, to the world, and it's great to see that there's a hunger and willingness to innovate among all of our partners there. So, that's definitely been a positive surprise. It's amazing to see also how much value audiobooks are adding to our subscriber base. So I feel really good about that.

Rich Greenfield: And then I think.

Rich Greenfield: Overall, I'm just happy to see that the partners we have on the publisher side and an author sides are just very excited about the innovation, we're bringing and very open minded.

Rich Greenfield: To try new things.

Rich Greenfield: This is an industry. That's so important I think to the world and.

Rich Greenfield: It's great to see that there is a hunger and willingness to innovate among all of our partners there so that.

Rich Greenfield: It's definitely been a positive surprise.

Rich Greenfield: And.

Yeah.

Rich Greenfield: It's amazing to see also how much value.

Rich Greenfield: <unk>, adding to our subscriber base, so I feel really good about that.

Rich Greenfield: Okay.

Daniel Ek: Okay, the next question is from Benjamin Black on margins. Last quarter, you mentioned 2024 gross margins should exceed those of 2023. Is that still the case?

Rich Greenfield: Okay. Next question is from Benjamin Black.

Benjamin Black: On margins last quarter, you mentioned 2024 gross margins should exceed those of 2023.

Benjamin Black: Is that still the case and if so how should we be thinking about how should we be thinking about the trajectory of gross margins throughout 2024.

Daniel Ek: And if so, how should we be thinking about the trajectory of gross margins throughout 2024? Thanks, Benjamin. Building on my earlier commentary, we feel very excited about the potential for 2024 gross margins. I mentioned some of the building blocks that we have ahead of us this year. And I think you should expect that we're going to continue focusing on what we did in 2023, which is building sequential growth in that gross margin. And it's about executing against those building blocks of opportunity that we have. Our next question is going to come from Jessica Reef-Ehrlich on the music business. Universal Music Group just pulled their music from TikTok.

Benjamin Black: Thanks, Benjamin building on my earlier commentary, we feel very excited about the potential for 2020 for gross margins I mentioned some of the building blocks that we have ahead of us kind of going into this year.

Benjamin Black: I think you should expect that we're going to continue focusing on what we did in 2023, which is building sequential growth in that gross margin and it's about executing against those building blocks of opportunity that we have that I mentioned previously.

Speaker Change: Okay. Our next question is going to come from Jessica Reif Ehrlich on the music business Universal Music group just pulled their music from Tictoc, what are the implications to Spotify from a competitive standpoint, and how does this impact if at all your negotiations with your recorded music partners.

Daniel Ek: What are the implications for Spotify from a competitive standpoint, and how does this impact, if at all, your negotiations with your record label partners? Yeah, obviously, I'm not going to comment on any sort of competitive dynamic, but what I can say is we feel really good about our relationship with our music partners. It's probably at the best it's been, I don't know, whenever it's been better, to be honest.

Speaker Change: Yeah, obviously, I'm not going to comment on.

Speaker Change: Any sort of competitive dynamic, but what I can say is we feel really good about our relationship with our music partners. It.

Speaker Change: It's probably at the best it's been.

Speaker Change: I don't know whenever it's been better to be honest, so I feel really good about where we are with our music partners.

Daniel Ek: So I feel really good about where we are with our music partners. I feel great about the value we're bringing to the music industry, and I think that's being widely recognized. And yeah, I don't think it has much of an impact on any other competitive dynamic.

I feel great about the value, we're bringing to the music industry.

And I think thats being widely recognized and yeah. I don't think it has much of an implication any other competitive dynamic, but we feel good about the partnership we feel great about opportunities to enhance the partnership to any extent that that.

Daniel Ek: But we feel good about the partnership. We feel great about opportunities to enhance the partnership to any extent that that creates opportunities, so yeah, we're overall very excited. All right, our next question is from Maria Ripps on Audiobooks.

Speaker Change: It creates opportunity so yes, we're overall very excited.

Speaker Change: Alright. Our next question is from Maria reps on audiobooks could.

Daniel Ek: Could you talk about what type of engagement you've seen with the free 15 hours of audiobooks listening? To what extent do you think the expanded value proposition is driving any of the subscriber momentum? And are you seeing any uplift to audiobook purchases in the relevant markets? Yeah, Maria, so I mentioned that in my prior response, but the engagement has been very strong, very positively surprised about the content mix it's driving as well, what type of titles that our consumers are engaging with, not very surprising, it is a lot of entertainment, it's a lot about culture, maybe some of the titles that traditionally doesn't do as well in the book market, but also pleasing is very many younger authors, newer authors as well, given the model where you can take a chance on a totally new book without sort of eating up the credits, which I think kind of drove you towards more safer bets.

Maria: Could you talk about what type of engagement you've seen with the 315 hours of audio books listening to what extent do you think the expanded value proposition is driving any of the subscriber momentum.

Maria: And are you seeing any uplift to audio books purchases in the relevant markets.

Speaker Change: Yeah, Maria So I mentioned that in my prior response, but the engagement has been very strong very.

Speaker Change: Very positively surprised about the content mix driving as well what type of titles.

Speaker Change: That our consumers are engaging with not very surprising it has a lot of entertainment. It's a lot about culture maybe.

Speaker Change: Maybe some of the titles that traditionally doesn't do as well in in the bulk market, but also pleasing is very many.

Speaker Change: Young girl authors newer authors as well given the model, where you can take a chance on a totally new book without sort of eating up the credits, which I think kind of drove us towards more safer bets.

Daniel Ek: So, we're seeing a very, very interesting sort of trend around content consumption, which is really great and, I believe, additive to the entire book industry, which is amazing. Now, as it relates to how that translates into our business, I think it's too early to say, but what we've seen generally speaking is the more engagement we have on our platform, the better the value is, of course, and then everyone knows that audiobooks are an expensive proposition where, you know, buying an audiobook today costs a lot of money, so it is another reason why we're offering great value to our consumers.

Speaker Change: No.

Speaker Change: We're seeing a very very interesting sort of trend or around the content consumption, which is really great and I believe additive to the entire book industry, which was this amazing now as it relates to how that translates into our business I think it's too early to say, but.

Speaker Change: What we've seen generally speaking is the more engagement we have on our platform. The better the value is of course, and then everyone knows that audiobooks is an expensive proposition, we're buying an Audi books today it costs a lot of money. So it is another reason why we're offering a great value to our consumers.

Daniel Ek: And that, of course, gives us an ability to increase the value that then allows us, in the long term, to follow through by reflecting that in the price that we have as well as for our consumers. Okay, next question from Justin Patterson on revenue potential. Investors now have confidence in your operating margin potential, and the redesigned app is responding with users. As you look ahead, what should give investors confidence in your revenue growth, achieving the 20% targets outlined by your investors? I'll start with this one, Ben, and then maybe you can chime in.

Speaker Change: And that of course gives us an ability to increase the value that then allows us long term to follow through by reflecting that in the price that.

Speaker Change: That we have as well to our consumers.

Speaker Change: Okay next question from Justin Patterson on revenue potential investors now have confidence in your operating margin potential and the redesigned app is resonating with users as you look ahead, what should give investors confidence in your revenue growth achieving the 20% targets outlined at your Investor day.

Speaker Change: Yeah.

Speaker Change: I'll start with this one band and then maybe you can chime in so I think.

Daniel Ek: So I think, again, this is very much a continuation of the trend of 2023. And just to level set again, in 2023, we walked into the year thinking that we would have healthy top-line growth and focus on the bottom line on efficiencies. And that was pretty much the year.

Speaker Change: Again this is very much a continuation of the trend of 2023 and just to level set again 'twenty two 'twenty three we walked into the year.

Speaker Change: Thinking that we will have healthy top line growth.

Speaker Change: Focus on the bottom line on.

Speaker Change: Efficiencies and that was pretty much the year, but we exceeded all of our expectations on the MCU side, which then translated into exceeding all of our expectations on the sub side and then when you're top of that with price increases that leads to a very healthy dynamic in that topline growth.

Daniel Ek: But we exceeded all of our expectations on the MEU side, which then translated into exceeding all of our expectations on the sub side. And then when you topple that with price increases, that leads to a very healthy dynamic. And that top line growth has really been a continuation of that trend throughout 2023. So I've said this before, but I'll say it again.

Speaker Change: <unk> has really been a continuation of that trend in all of 2023. So.

Speaker Change: I've said this before but I'll say, it again Mou growth sooner.

Daniel Ek: MEU growth will sooner or later translate into conversion to subscribers, that sooner or later will translate into revenue growth, that sooner or later will translate into the bottom line. And so, given 2023, I feel really good about our ability to have healthy revenue growth throughout the year. And with this smaller cost structure that we're having because of the focus on efficiency that we have really throughout 2023. We talked about it on the podcasting side.

Speaker Change: Sooner or later, then translate into conversion to subscribers that sooner or later then translate into revenue growth that sooner or later then translates into bottom line.

Speaker Change: And so given 2023 I feel really good about our ability to have healthy revenue growth throughout the year.

Speaker Change: And with this smaller cost structure that we are having because of the focus on efficiency that we had really throughout 2023, we've talked about it on the podcasting side, we've talked about it on the employee side, but also as Ben mentioned with cloud costs all of the other things that we've been focusing on.

Daniel Ek: We talked about it on the employee side. But also, as Ben mentioned, with cloud costs, all the other things that we've been focusing on, that should give you confidence that 2024 will be a great year. I don't know if you have any additional comments, Ben.

Speaker Change: That should give you confidence that 2024, it will be a great year I don't know if you have any addition, Ben.

Ben Kung: Yeah, no, I think all that commentary is very much sort of the perspective going forward. The top, the funnel kind of of our user side and sub side looks very strong. And I think the focus is about sort of monetizing that both from a premium subscription perspective, as well as focusing on making sure that our ad business continues to grow at a healthy clip going forward. So we feel very strong about sort of progressing towards that. Our next question is going to come from Kanan Venkateshwar on product. Given that pricing is a bigger part of the growth algorithm, have you considered models beyond the all-you-can-eat framework used today? In fact, we actually do have some other pricing mechanics throughout the world. It's easy to think that Spotify is a single proposition for everyone in the world. It's far from today,

Ben: Yes, no I think all of that commentary.

Ben: Very much sort of perspective going forward.

Ben: The funnel kind of of our user side and sub side looks very strong and I think the focus is about sort of monetizing that both from a premium premium perspective subscription perspective, as well as focusing on making sure that our that our ads business continues to grow.

Ben: Healthy clip going forward. So we feel really strong about sort of progressing towards a 20% targets.

Speaker Change: Okay. Our next question is going to come from <unk> <unk>.

Speaker Change: On Ah <unk>.

Speaker Change: Product <unk>.

Speaker Change: Given that pricing is a bigger part of the growth algorithm have you considered models beyond the all you can eat framework used today.

unknown: In fact, we actually already do have some other pricing mechanics throughout the world. It's easy to think that Spotify is a single proposition for everyone in the world. It's far from today. So for instance, we have a day passes just one product.

Daniel Ek: So, for instance, we have day passes. It's just one product that we're offering in certain markets. Week passes, too.

unknown: But we're offering.

In certain markets week passes we even have a physical gift cards that people.

Daniel Ek: We even have physical gift cards that people, you know, scratch cards from on a weekly basis in order to top up their Spotify listening. So, we are very much adapting our pricing models in favor of what consumers want. And that's something that you should expect us to continue to do. Now, with that said, to touch on a little bit.

unknown: Scratch cards from on a weekly basis in order to top up their Spotify listening so.

unknown: We are very much adapting our pricing models in.

unknown: In favor of what consumers want.

And that's something that you should expect us to continue to do now with that said.

unknown: To touch a little bit one of the things of course.

Daniel Ek: One of the things, of course, why we are talking about the Apple case is that many things like, for instance, a la carte purchases, things like superfan things, like purchasing audiobooks, top-up things that could be quite meaningful for Spotify's revenues are a significant hindrance today because Apple insists on taking a 30% cut, which in many cases exceeds even our own cuts that we're able to take inside of the app. So some of these more innovative things that we would like to do, we're currently restricted in doing in the iOS ecosystem, which limits some of the more innovative things that we would like to do. So, yeah, all in all, we are already doing them in other territories. We would like to do even more of it.

unknown: We are talking about.

unknown: The Apple case is.

unknown: Many things like for instance, Ala Carte purchases things like superfan things like purchasing of audiobooks top up things that could be quite meaningful for Spotify as revenues is significant hindrance today, because apple insists on taking a 30% cut which in many cases exceeds even our own cuts that were able to <unk>.

unknown: Inside of the App. So some of these more innovative things that we would like to do we are currently restricted in doing on the iOS ecosystem.

unknown: Puts limit some of that more innovative things that we would like to do so yes.

All in all we are already doing it in other territories, we would like to do even more of it but to do that certainly in the western world, which many of these markets being very heavily iOS influenced we are precluded from doing it at a way, where it which could be profitable and good for consumers and creators.

Daniel Ek: But to do that, certainly in the Western world, where many of these markets are very heavily iOS influenced, we are precluded from doing it in a way that could be profitable and good for consumers and creators because of Apple's stance. All right, that's a good segue into Michael Morris' question on the Digital Markets Act. You posted twice about the DMA and its potential positives for your business, and then also about your dissatisfaction with Apple's proposed changes.

unknown: Cause of Apple sales.

Speaker Change: Alright, that's a good segue into Michael Morris is question on the digital markets Act.

Michael Morris: You posted twice about the DMA with the potential positives to your business and then also about your dissatisfaction with Apple's proposed changes.

Daniel Ek: Do you expect the DMA to be implemented in a way that supports your vision? And if so, what do you expect the new functions to be available for, and how may they impact the company financially? Yeah, Michael.

Michael Morris: Do you expect the DMA to be implemented in a way that supports your vision and if so what do you expect the new functions to be available and how that may impact the company financially.

Speaker Change: Yeah, Michael I think the truth is we don't know yet.

Daniel Ek: I think the truth is we don't know yet. We outline our response to how we would be compliant with the DMA, but obviously, that then very much depends on Apple's stance on allowing us to do so. And Apple then obviously subsequently responded with their stance, which is very much incongruous with our stance on the matter. And frankly, I think it's a bit of a farce because it looks on the surface that they're compliant with it. But behind the surface, they're doing pretty much everything to make this. It's such an unattractive experience that no sane developer would want to pick any of the new terms. Now, the good news, I guess, from the investor's standpoint, and I know that there were initially some questions about whether or not this would be a downside for Spotify. I don't think that's the case.

Speaker Change: We outline our response to how we would be compliant with the DMA, but obviously that then very much depends on.

Speaker Change: <unk> stance in allowing us to do so and Apple then obviously subsequently responded with their stance which is very.

Speaker Change: Very much incongruent with our stance on the matter and frankly, I think it's a bit of a forest because it looks on the surface that there they are complying with it.

Speaker Change: But.

Speaker Change: Behind the surface theyre doing pretty much everything to make this such an attractive experience that no same developer want to pick any of the new terms.

Speaker Change: Now the good news I guess from the Investor standpoint.

And I know that they're initially with some questions about whether or not this would be a <unk>.

Speaker Change: <unk> side for Spotify I don't think that's the case.

Daniel Ek: So, you know, we still have the ability to be on the old terms and keep going as we're currently going, but there are future upsides that could be quite significant. We talked a little bit about it with, you know, fan clubs, all these other things that we could do for creators that we would probably be barred from doing because it simply would mean that all of Spotify would be unprofitable if we took these new terms. So, you know, no downside, but there would be quite a lot of upside if, in fact, we were going to be able to do what we wanted to do, not just for Spotify but for creators and consumers alike. And just as a last reminder, this law will come into play on March 7th.

Speaker Change: So we still have the ability to be on the old terms and keep going as we're currently going but there are future upsides that could be quite significant we talked a little bit about it with.

Speaker Change: Fan clubs all these other things that we can do for creators that we would probably be barred from doing.

Speaker Change: Because it simply would mean that all of Spotify would be unprofitable. If we took these new terms so.

Speaker Change: No downside, but.

Speaker Change: There will be quite a lot of upside if in fact, we were going to be able to do what we wanted to do not just for Spotify, but for creators.

Speaker Change: And consumers alike, and just as the last reminder, this law will come into play in March 7th So obviously.

Daniel Ek: So, obviously, my hope is still very much that the European Commission will take action and allow this to happen because it will be far better for the ecosystem, both for consumers and creators alike. Okay, our next question comes from Vacha Levy on audiobooks. How should we think about the impact of audiobooks' consumption costs on margins? Thanks for your answer.

Speaker Change: My hope is still very much that the European Commission will take action and allow this to happen because it will be far greater for the ecosystem, both for consumers and creators alike.

Speaker Change: Okay. Our next question comes from <unk> Levy on audiobooks how.

Levy: How should we think about the impact of audiobooks consumption costs on margins, yes. Thanks Patrick.

Paul Vogel: As you know, we don't really break out the individual components like that. What I will say is, while we're investing in audiobooks, we still see a nice improvement in gross margin through 2024, which Ben has talked about at length already on the call. And so we feel like we have a model for audiobooks and the progression of audiobooks over the next couple of years. It's going to be very additive. We've talked about it at Invest Today, where we believe the long-term gross margin of the audiobooks business can get to. And so we're still really encouraged about that. And in general, we're very optimistic that you're going to continue to see gross margin progression throughout 2024. Okay, we've got another question from Kanan, this time on the music business. Has growth in international markets helped flip any major ones from fixed minimum payouts to variable payouts, and could we see some impact in 2020?

Levy: As you know, we don't really break out the individual components like that what I will say is.

Levy: While we are investing in audio books, we still see a nice improvement in gross margin through 2024, which Ben has talked about at length already and on the call and so we feel like we have a model for audio books and the progression of audio books over the next couple of years, it's going to be very additive.

Levy: We've talked about at the Investor Day, where we believe the long term gross margins. The audio books business can get to and so we're still really encouraged about that.

Levy: And in general, we're very optimistic that you're going to continue to see gross margin progression throughout 2024.

Speaker Change: Okay. We've got another question from Ken on.

Speaker Change: This time on our music business has growth in international markets helped flip any major ones from fixed minimum payouts to variable payouts and could we see some impact in 2024.

Speaker Change: Great question.

Ken: Short version the short answer to this question is yes, I would say that.

Ben Kung: The short answer to this question is a yes. I would say that it's been a story of steady progress in sort of how we grow the user base and then begin to monetize them in these international markets. And there's really kind of two engines for this. It's about sort of driving subscriber growth and building upon sort of subscription revenues in these markets, but also making sure that we start to light up the advertising side in these markets as well, both of which basically ultimately help us clear these hurdles with fixed minimum payouts. So I think the story is one of constant growth. We've got another question from Doug Emmeth on podcasting. With most major podcast content renewals resolved, what are your key priorities for the podcast business in 2020? Yeah, um... Much more of a continuation of 2023, with the exception, obviously, as you said, we've kind of transitioned the podcasting business from one structure to a different structure throughout 2023. That's mostly done.

Ken: It's been a story of steady progress in sort of how we grow the user base and then begin to monetize them in these international markets and there is really kind of two engines to this it's about sort of driving subscriber growth and building upon sort of the subscription revenues in these markets, but also making sure that we start to light up the advertising side indeed.

Ken: As well both of which basically ultimately help us clear these hurdles in fixed minimum payouts. So I think the story is.

Ken: One of ever constant progress in this department.

Okay I've got another question from Doug Anmuth on podcasting with most major podcast content renewals resolved what are your key priorities for the podcast business in 2024.

Ken: Yeah.

Speaker Change: Much more of a continuation of 2023 with the exception obviously as you said, we've kind of transitioned the podcasting business from one structure to a different structure throughout 2023, that's mostly done now it's back to innovation and growth again.

Daniel Ek: Now it's back to innovation and growth again. What I'm most excited about is there are lots of things creators are asking us to do that enable them to post content easier, and have more ways of engaging with their audience. You've seen some of this already in 2023.

Speaker Change: What im most excited about is there are lots of things traders are asking us to do that enables them to easier post content, having more ways of engaging with their audience you've seen some of this already in 'twenty, two and three as a reminder.

Daniel Ek: As a reminder, you saw video podcasting growing in a healthy way on the platform. You've seen us add Q&A responses, which is quite phenomenal to see the comments that are showing up on Spotify. Now, you've seen much more interactivity, and more and more creators are starting to use those tools. But that's just the beginning.

Speaker Change: You saw a video podcast and growing in a healthy way on the platform you've seen us add Q&A responses, which is quite phenomenal to see the comments that are showing up on Spotify.

Now <unk>.

Speaker Change: <unk> seen a much more interactivity and more and more creators so starting to use those tools, but that's just the beginning we have plenty of plans on podcasting, which I think will mean more content on the platform, which I also think means more engagement. So.

Daniel Ek: We have plenty of plans for podcasting, which I think will mean more content on the platform, which I also think means more engagement. So, you know, it's been a profitability story in 2023, and I think that's going to play out. But what we're focused on is really all about growing podcasting and increasing it, and we think it's a lot larger of a medium than most people today really give it credit for.

Speaker Change: It has been a profitability story in 2023, and I think that's going to play out but what we're focused on is really all about now growing podcast thing and increasing it and we think it's a lot larger.

Speaker Change: Or a medium that most people really today given credit for it so that's not where we need to prove but we're doing so from a profitable standpoint instead of one.

Daniel Ek: So that's not what we need to prove, but we're doing so from a profitable standpoint instead of one that's losing a lot of money. Okay, we've got a question from Rich Greenfield on user engagement. Daniel, you talked about user interest in your hack day creation day list, which feels like another AIML use case to drive engagement. How is it impacting overall usage and time spent?

Speaker Change: A lot of money for us.

Speaker Change: Okay. We've got a question from rich Greenfield on user.

Rich Greenfield: User engagement, Daniel you've talked about user interest in your half day creation de list, which feels like another AI ml use case to drive engagement how is it impacting overall usage and time spent and by the way My day list for today is sad Tailspin Tuesday.

Daniel Ek: And by the way, my daily list for today is sad tailspin Tuesday. Well, hopefully, nothing we're saying on this call today gives you any reason to tailspin on a sad basis. But jokes aside, yeah, I mean, this again is a story of innovation at Spotify. You know, what's so cool is we have these crazy engineers and scientists inside of the company that dream up these kinds of weird and wonderful things, which seem like very narrow use cases. But this is culture. And what they do is they test culture, they bring it out, and then personalize culture for people. And it turns out that people are just reacting in this weird and wonderful way, and they want to express their own identity through music, which in itself is not surprising.

Speaker Change: Alright, well hopefully nothing we're saying in this call today. It gives you any reason to tailspin.

Speaker Change: The fab basis.

Speaker Change: But.

Daniel: Joe jokes aside yes, I mean, this again is a story of innovation that Spotify.

Daniel: What some cool is we have the.

Speaker Change: <unk> Crazy.

Engineers and scientists inside of the company. The dreams up these kind of weird and wonderful things, which seems like very narrow use cases, but this is culture and what they do is they test culture and they bring it out and then personalized culture to people in and it turns out that that people are just reacting in this weird I'm wondering.

Speaker Change: <unk> way and they want to express their own identity through music, which in itself is not surprising it's a very core thing for humanity and something that we've been doing.

Daniel Ek: It's a very core thing for humanity and something that we've been doing. And the team keeps finding weird and wonderful ways for consumers to be able to do that. And, you know, I think I referenced this, but we saw searches increased by over 2000% on their list. So it's a widely sought-after feature.

Speaker Change: And the team keeps finding weird and wonderful ways for our consumers to be able to do that.

Speaker Change: <unk>.

Speaker Change: I think I referenced this but we saw.

Speaker Change: Searches increased by over 2000% Dallas. So it's a widely sought after feature people are excited to come into the App every day now to find out whatever Spotify thinks your current mood as of today.

Daniel Ek: People are excited to come into the app every day now to find out whatever Spotify thinks your current mood is today. And, yeah, we keep churning these types of things out. It's kind of our way of creating content, and I'm really proud of the team and the things that they're doing in this department. And it wouldn't surprise me if we see many more innovative things come out of it, both on, of course, the music side, but later on also reflecting that on the audiobook side and the podcasting side as well.

Speaker Change: And yeah, we keep churning these types of things out, it's kind of our way of creating content.

Speaker Change: And I'm really proud of the team.

Speaker Change: And the things that they're doing in this department and it wouldn't surprise me if we see many more innovative things come out of it.

Speaker Change: Bolt on of course on the music side, but later on also reflecting that on the audiobook side on the podcasting side as well.

Daniel Ek: Our next question is going to come from Benjamin Black, on efficiency. What are some of the key learnings you've seen with the more streamlined cost structure and as we look ahead what's your philosophy on headcount growth? Yeah, I mean, the, the key things are probably not the surprising things uh... it's always what happens right initially when you go through an exercise everyone kind of says well we can't cut this because then all the sudden everything will stop working and it turns out that as is true in so many cases uh... most things can tend to work anyway even when you go through that exercise and and actually even killing things that sometimes sort of works is a healthy thing to refocus and re-energize people on the things that really drive lots of value so those are are some of the obvious lessons which i think you guys have heard plenty of times before on these calls before i think the more exciting things are the things we're in the midst of learning this as a company, So, I by no way means think we're fully adapted to this new mindset, but I think this is something I wrote in my internal memo that we then published as well, is this notion of being relentlessly resourceful.

Speaker Change: Okay. Our next question is going to come from Benjamin Black.

Speaker Change: Yeah.

Benjamin Black: On efficiency what are some of the key learnings you've seen with the more streamlined cost structure and as we look ahead, what's your philosophy on head count growth.

Benjamin Black: Yeah, I mean the.

Benjamin Black: The key things are probably not the surprising things it's always what happens right. Initially when you go through an exercise to everyone kind of says well we can't cut. This because then all of a sudden everything will stop working and it turns out that as is true in so many cases, most things can tend to work anyway, even when you go through that exercise.

Benjamin Black: It actually even killing things that sometimes sort of works is a healthy thing to refocus and re energize people and the things that really drive lots of value. So those are some of the obvious lessons, which I think you guys have heard plenty of times before on these calls before I think the more exciting things are there.

Benjamin Black: Things were in the midst of learning this as a company.

Benjamin Black: I by no way it means thinks we're fully adapted to this new mindset, but I think.

Benjamin Black: This is something I wrote in my internal memo that with them published as well. This is this notion of being relentlessly resourceful for me that means to think constantly about the resources, we're having and not just think about getting more of them, but thinking about how we reallocate constantly everything we're doing to the most and highest <unk>.

Daniel Ek: For me, that means constantly thinking about the resources we're having and not just think about getting more of them but thinking about how we constantly reallocate everything we're doing to the highest and highest impact use cases. And I don't think we are there yet, so I think the good news is that there are still some ways for us to go on it. And I think the way you should think about headcount growth is that we're not allergic to it. We're not saying, hey, we can never ever grow anything.

Benjamin Black: Impact use case and there I don't think we are yet so I think the good news is that there is still some ways for us to go.

Benjamin Black: And on it and I think the way you should think about head count growth is we're not allergic to it we're not saying hey, we can never ever grow anything we should grow things that obviously are working but the hurdle rate for any new type of investments will be much higher than what it has been and more importantly, I think youre going to see us be more diligently.

Daniel Ek: We should grow things that obviously are working, but the hurdle rate for any new type of investment will be much higher than what it has been. And more importantly, I think you're going to see us be more diligent in shutting down things that perhaps have sort of worked but may not work as well going forward into the future. And you're going to see that all across the company in a pretty big way. And I think the biggest takeaway I can give you is that it doesn't mean that the company is in any danger of any kind, because sometimes that gets interpreted by media and investors like, oh, if they're no longer showing up in a big way at event X, maybe they're in dire straits and so on. That's not the case,

Benjamin Black: <unk> and shutting down things that perhaps.

Benjamin Black: Have sort of worked but may not work as well going forward into the future.

Benjamin Black: And youre going to see that all across the company in a pretty big way and I think the biggest takeaway I can give to you that doesn't mean that the companies any danger of any kind because sometimes they get interpreted by media and investors like Oh, if theyre no longer showing up in a big way to events ex maybe they are in dire.

Benjamin Black: Rates and so on that that's not the case, we're just simply thinking about are there better ways for us to do this are there better ways for us to achieve the sufficiency.

Daniel Ek: We're just simply thinking about, are there better ways for us to do this? Are there better ways for us to achieve this efficiency? And try to think outside of the box. Maybe it is not to throw a lavish party.

Benjamin Black: And try to think outside of the box maybe it is not to throw the lavish party maybe it has to have a virtual party, where we can have 10 times the audience coming show up maybe it is about partnering with other brands and doing something in conjunction that where one plus one doesn't equal two but equal three or more so youre going to see.

Daniel Ek: Maybe it is to have a virtual party where we could have 10 times the audience come and show up. Maybe it is about partnering with other brands and doing something in conjunction where one plus one doesn't equal two but equals three or more. So you're going to see us, I think, still have a lot to learn but re-question things that in the past have worked, but we need to think about how we do them going forward. All right, we've got time for a few more questions. Our next one is going to come from Stephen Cahal on margins. The first quarter is typically the lower margin quarter of the year.

Benjamin Black: As.

Benjamin Black: I think still have lots to learn but re question things that in the past have worked but we need to.

Benjamin Black: Think about how we do them going forward.

Speaker Change: Alright, we've got time for a few more questions.

Speaker Change: Our next one is going to come from Steven Chahal on margins first quarter is typically the lower margin quarter of the year are there any one time benefits in the strong implied Q1 margin guidance or can we assume the same seasonality of sequentially improving margins for 2024.

Ben Kung: Are there any one-time benefits in the strong implied Q1 margin guidance, or can we assume the same seasonality of sequentially improving margins for 2024? Thanks, Steven. I think you have sort of the right themes in your question there. I think to reiterate, as Daniel said, in 2023, we had a lot of focus areas between sort of growing our users and subs, driving sort of monetization through price increases and efficiency actions. All of these have sort of taken our core business, I think, to a new level, and I think Q1 is sort of where that new core business is shining through. And so I think that that implies sort of like a new starting point, I think, for where you can expect the margin to go.

Steven Chahal: Thanks Steven.

Steven Chahal: I think I think you have sort of the right themes in your question there I think to reiterate.

Speaker Change: As Daniel said in 2023.

Speaker Change: A lot of focus areas between sort of growing our users and subs.

Steven Chahal: Driving sort of monetization through price increases and efficiency actions. All of these has sort of taken our core business I think to a new stair step and I think Q1 is sort of where where the new core business is shining through and so I think that.

Steven Chahal: That implies sort of like.

Steven Chahal: New starting point I think for where you can expect the margin to go and as I've said before our focus is to continue building on that sequentially quarter on quarter into 2024. So we look forward to making progress in that department.

Daniel Ek: And as I said before, our focus is to continue building on that sequentially quarter on quarter into 2024. So we look forward to making progress. We've got a question from Richard Kramer on execution.

Steven Chahal: Okay. We've got a question from Richard Kramer on execution.

Daniel Ek: What's the message to the organization about new growth initiatives following your recent headcount reduction? How do you mitigate the execution risk in 2020? Yeah, I think implied in your question, Richard, is obviously this: how do you do both?

Richard Kramer: What's the message to the organization about new growth initiatives. Following your recent head count reduction how do you mitigate the execution risk in 2024.

Richard Kramer: Yes, I think think implied in your question Richard.

Richard Kramer: Obviously this.

Daniel Ek: How do you, on the one hand, save, and how do you tell people that you want to grow? And I think this is why, in my last response, I focused so much on the mindset of being relatively resourceful and what it actually means. So I don't think it is either or; I think it's both and. And so I think we need to become more efficient by deprioritizing some of the existing things, but we also need to invest in some of the new. But when we're investing in some of the new, what is the optimal way of doing that?

Speaker Change: How do you do both how do you on the one end save and how do you tell people that you want to grow and I think this is why in my last response I focused so much about the mindset of being relentlessly resourceful and what it actually means so I don't think it is.

Speaker Change: There were I think its both and and so I think we need to become more efficient by prioritizing some of the existing things, but we also need to invest in some of the new.

Speaker Change: But when we're investing in some of the new what is the optimal way of doing that you talk about execution risk I think it is exactly the right thing.

Daniel Ek: You talk about execution risk; I think it is exactly the right thing and the right framing of it. It is about execution. It isn't about strategy. It's about how do we, by constraining the resources we have, how do we think about different ways of executing some of these newer growth initiatives? If the hurdle rate is X, how can we more quickly prove out that something is working?

Speaker Change: Right framing of it it is about execution it isn't about strategy, it's about how do we.

Speaker Change: By constraining the resources, we have how do we think about different ways to executing some of these newer growth initiatives.

Speaker Change: If the hurdle rates.

Speaker Change: X how can we be more quickly prove out that something is working those are some of the questions that I, then Paul and the rest of the team is.

Daniel Ek: Those are some of the questions that I, Ben, Paul, and the rest of the team have when we're looking at these types of things and when we're talking to the team. And I think the good news is that the teams are excited. They're excited to show that there's a different path to do this. And they're excited because they also see the momentum in how it currently translates to the business. And that sort of momentum fuels that mindset as well. I think it would have been honestly harder to do so from a backdrop if we had to do some of these discussions if we had a year, a year and a half of slog of just ever sort of going through this. But we've actually gone through all the hard stuff this past year, and we have plenty of things to learn, of course, but I feel really good about the optimism that the team has now. It's never fun to do a riff, of course.

Speaker Change: Is having when we're looking at these types of things and when we're talking to the teams and I think the good news is that the teams are excited they're excited to show that there is a different path to do this they are excited because they also see the momentum in how it currently translates to the business.

And that sort of momentum fuels that mindset as well I think it would have been honestly harder to do so from a backdrop. If we had to do some of these discussions if we had a year year and a half of slog of just ever sort of gone through this but we have actually gone through all the hard stuff.

Speaker Change: This past year, and we have plenty of things to learn of course, but I feel really good about now the optimism that the team has never fun to do a raft of course.

Daniel Ek: And so, you know, we're happy to have this behind us, and we feel obviously a huge sense of gratitude to everyone who's been part of the company and then had to leave. But I know the team is excited about where we are and where we're heading and how it translates into a healthier Spotify. We're going to take one last question and... We're going to take Maria's question, Maria Ripps, on podcasts. Is it reasonable to assume that Spotify is looking to structure most of its podcast deals in a similar fashion to what was reported in the Wall Street Journal regarding Joe Rogan?

Speaker Change: So.

Speaker Change: We're happy to have this behind us and we feel obviously.

Speaker Change: Huge sense of gratitude to everyone, who has been part of the company and then had to leave but.

Speaker Change: I know the team is excited about where we are and where we're heading and how it would translate into a healthier Spotify.

Speaker Change: Alright, we're going to take one last question and <unk>.

Speaker Change: We're going to take Mario's question Maria reps on podcast thing is.

Speaker Change: Is it reasonable to assume that Spotify is looking to structure most of its podcast deals in a similar fashion to what was reported in the Wall Street Journal regarding Joe Rogan.

Daniel Ek: And how's the company thinking about the tradeoff between engagement and advertising revenue or profitability by de-emphasizing exclusivity? Yeah, I think Maria, I sort of already mentioned some of these things, but generally speaking, we had multiple strategies in podcasting. It wasn't just all about exclusivities, even if that got most of the press headlines.

Mario: And how is the company thinking about the tradeoff between engagement and advertising revenue or profitability by deemphasizing exclusivity.

Speaker Change: Yes, I think Maria.

Speaker Change: Sort of already mentioned some of these things but.

Speaker Change: Generally speaking we had multiple strategies in.

Speaker Change: Podcasts. It wasn't just all about exclusivity is even if that got most of the press headlines and what we've been able to see here is as we've been learning over these past few years is that while some of these exclusivity deals worked.

Daniel Ek: And what we've been able to see here is, as we've been learning over these past few years, that while some of these exclusivity deals worked, generally, they weren't aligned with what the creator wanted. The creator wanted to have a broader audience. And I feel like with these new deals that we've been making for most of 2023, we are in a position where we're actually better aligned with the creator. We can both deliver the growth rate, and we are equally incentivized to drive audience growth and, of course, then also drive revenue growth because we both share in that upside. So I think the team was able to innovate and create a much smarter structure, and that is the path we see going forward on more and more of our deals.

Speaker Change: Generally it wasn't aligned with what the trader wanted the crater wants to have broader audience and I feel like with these new deals that we've been making for most of 2023.

Speaker Change: We are in a position, where we're actually better aligned with the greater we can both deliver the growth rate and we are equally incentivized to drive audience growth and of course, then also drive revenue growth because we both share in that upside. So I think the team was able to innovate and create a much smarter structure.

Speaker Change: Sure and that is the path, we see going forward on more and more of our deals.

Daniel Ek: And I think even on the MU side, it will be on a healthy basis because we're in a very different position than we were just a few years ago in podcasting because today Spotify is, in many cases, the number one podcast player already. So exclusivity makes sense when you're the smaller player and trying to gain scale. When you're the bigger player, the additional value of the exclusivity is far smaller than it is about being aligned.

Speaker Change: And.

Speaker Change: I think even on the EMEA side, it will be on a on a healthy basis, because we are in a very different position than we were just a few years ago in podcasting.

Speaker Change: To date Spotify is in many cases, the number one podcast and player already so exclusivity makes sense. When you are the smaller players trying to gain scale when you're the bigger player.

Speaker Change: The additional value of the exclusivity is for.

Speaker Change: <unk> smaller than it is about being aligned and it feels also that from a value point of view. This is better aligned with who we are at Spotify too.

Daniel Ek: And it feels also that from a values point of view, this is better aligned with who we are at Spotify. Great. Thanks, Maria, and thanks, everyone, for your questions. That's going to conclude our question-and-answer session today, and I'd like to turn it back over to Daniel for some closing remarks. Yeah, thanks, Bryan. The long-term opportunity for Spotify is strong.

Speaker Change: Great. Thanks, Maria and thanks, everyone for your questions that's going to conclude our question and answer session today and I'd like to turn it back over to Daniel for some closing remarks.

Yeah. Thanks, Brian.

Daniel: The long term opportunity for Spotify is strong hopefully you heard that now during the call and during the Q&A session and we will continue to innovate in big and small ways to deliver for our listeners and the artist creators and authors on our platform and make no mistake that we will continue to make bold bets invest and seize on the opportunities when they make sense.

Daniel Ek: Hopefully, you heard that now during the call and during the Q&A session. And we will continue to innovate in big and small ways to deliver for our listeners and the artists, creators, and authors on our platform. And make no mistake that we will continue to make bold bets, invest, and seize opportunities when they make sense. But hopefully, it's clear now with a much more disciplined approach going forward.

Daniel: But hopefully it's clear now with much more disciplined approach going forward, thanks, and thanks, everyone for joining us today.

Daniel Ek: Thank you everyone for joining us today. Okay, great. And that concludes today's call. A replay will be available on our website and also on the Spotify app under Spotify Earnings Call Replays.

Speaker Change: Okay, Great and that concludes today's call a replay will be available on our website and also on the Spotify App under Spotify earnings call replays, thanks, everyone for joining.

Bryan Daniel Goldberg: Thank you everyone for joining. This concludes Spotify's fourth quarter 2023 earnings call and webcast. Thank you for your participation. You may now disconnect. Muy buenas pinches noches, chicas amatores! El stand-up en espaol está de regresso. Al gobierno, mames! Treinta rutinas.

Speaker Change: This concludes Spotify is fourth quarter 2023 earnings call and webcast. Thank you for your participation you may now disconnect.

Speaker Change: Thank you Dave.

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Operator: Estos hombres no dejan de cagarlas. Cómo vergas? Quemas el pinche mar, wey!

Speaker Change: Thank you, Matt a way they told me is called <unk>.

Operator: Eso no es comedia. Usted conoce tu rer a alguien, por Dios. Usted es un contador. Cóllate a la verga!

Operator: Estoy harto de tu gobierno, Tinieblas. Yo no estoy de acuerdo. Yo no quiero en la presidencia.

Speaker Change: We absolutely will be able to think of it is going to take up whatever you want to keep going up but can you kind of think youre looking at a couple of Olympic ticket also generics if you could just put us in a few moments.

Operator: No te quiero en nada. Porque eres un gobernante chiquito. Con funcionarios chiquitos. Con resultados chiquitos. Eres nfimo, papá. Cómo ves? Treinta comediantes.

Speaker Change: Well, maybe on this and if at all.

Operator: Neta? T? Con tu cara de Carlitos de Rugrats? Después de estar aos en crack? Y mira, si jugue, no se mueve nada. As ve tu madre cuando jugue. Hace yogurt.

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Operator: Siempre que salgo con una chica, como que me dificulta dar el siguiente paso. El podcast de Stand-Up de Spotify. Segunda temporada. Esperante, ya no me paró. Inmortalando la comedia en espaol. Me gusta interactuar con mi pblico, para ejemplo, a ver t. Disfrtalo gratis, solo por Spotify. Ya voy! Year 2039 A new timeline For the record, say your name, your nationality, and your profession. My name is Isabel Fresal, I'm Mexican, and I'm dedicated to 3D design and modeling. With questions that seem to have no time. Do you feel that reality has a problem in its logical structure? What is it? The origin of a new mission We have one last riddle for you. What should I do? There is a very special object that was given to us for its analysis. We do not know how to decipher it. A cube, a black cube. Connected to all universes. Why Mars?

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Operator: Get ready for a journey that approaches from an unknown future The cube is a book of verb conjugations It will be found on August 6, 2042 A journey starring anonymous heroes Javier Bartos, I would like to know about you There is not much to talk about me The only person who with a single movement can change everything A journey that is born from a past that once occurred in many different places Pegaso This is the right line, this is the happy line Good night, Gaspar Marín The key word to travel to the past is gravity Travelers, travelers of the future

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