Spotify Technology S.A.

Good morning. My name is Julianne and I will be a conference operator today. At this time, I would like to welcome everyone to Spotify's first quarter 2023 earnings call. If you require operator assistance at any time, please press star zero. I would now like to turn the call over to Brian Goldberg, head of investor relations. You may begin your conference.

Thank you, and welcome to Spotify's first quarter 2023 earnings conference call. Joining us today will be Daniel Ek, our CEO, and Paul Vogel, our 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 SpotifyEarningsQ123. Analysts can ask questions directly into Slido, and all participants can then vote on the questions they find the most relevant. Thank you. Thank you. Thank you very much.

Hey everyone, and thank you so much for joining us. As we open this call, I really can't help but feel a tremendous amount of excitement about the progress our team made this quarter. In fact, this quarter represents our strongest Q1 since going public. And over the last few months, we've celebrated a few significant milestones, including surpassing over half a billion users and reaching more than 200 million subscribers. Further, our user growth exceeded our expectations by 15 million and our subscriber numbers by 3 million. And at our scale, it is pretty remarkable to see this level of re-acceleration in our user growth. But it is a trend that's been consistent now for over the last five quarters. In fact, the last two quarters saw the largest MAU growth in our history. The outperformance was broad-based, meaning growth was pretty evenly spread across every region without a single market dominating. And on top of this, we were able to accomplish this level of growth with lower marketing spend. We look at this as a promising sign, but it's too early to draw any conclusions yet. And as you heard me say repeatedly over the years, a healthy top-line user growth is the leading indicator of our ability to achieve future success on all other financial metrics. And when we successfully attract new users, it's only a matter of time before the conversion rate to subscriber increases, which then, of course, drives our revenue upwards over the long term. And this is a formula that's worked for us exceptionally well and one I fully expect to play out again. Speaking of long-term, I want to spend a moment talking about our approach to investment timelines and the outcomes they can deliver when we stay on the course. Let me give you a recent example. For those who turned in to our March StreamOn event, we unveiled numerous creator tools and debuted an entirely new and updated Spotify experience. including a first-of-its-kind AI DJ. And these changes marked the biggest updates to our user experience since we introduced mobile more than 10 years ago. But of course, this didn't happen overnight. These are things that we've been building on over the last 12 to even 18 months, and in some cases even longer. And as we shift to rolling out these features, as well as several others across our 184 markets, we're seeing an acceleration in MAU retention and subs. And sometimes our investments manifest themselves immediately, but more often than not, their impact is gradual and takes shape over several quarters, or sometimes even years. And while we really can't anticipate when the benefits will materialize, we do know that our growth is a consequence of our relentless pursuit of learning, iterating and improving. We make strategic investments and we wait for the results to compound, proving out the benefits for users, creators and of course our other stakeholders. And by delivering an exceptional experience that is centered on creating value for these stakeholders, over time we're seeing a correlation with a stronger financial performance. I've often talked about the fact that our success is not attributable to just one thing, but literally hundreds, if not sometimes even thousands of improvements that we're investing in and working on in parallel. And that's not to say that every one of them ends up producing the outcomes we strive for, but over time, the things that do work, they do add up. And together, they have a compounding effect. So think of it really as waves of innovation, investment, and improvement. There's an ebb and there's a flow over time. But over time, it really becomes more predictable and produces steadier results. And the key then, it seems, is to maintain a long-term focus to help us navigate current short-term uncertainties. But don't let all my talk about the importance of long-term investing allow you to believe that we are rethinking our commitment to driving efficiency. So as many know, last quarter and building on what we shared at last year's Investor Day, I talked about shifting towards becoming a more efficient company. There's really no question that we've become leaner in the last six months, but this progress is still early in its reflection on our financials. The actions we've taken, coupled with other opportunities to reduce spending in areas like marketing and content production and real estate, should lead to a steady progression of key metrics throughout the year, all of which makes me even more bullish about the remainder of 2023 and beyond. And with that, I'll turn it over to Paul for more detail behind the numbers, and then Brian will open it up for the Q&A.