Spotify Technology S.A.

Good morning and welcome to Spotify's fourth quarter 2023 earnings call and webcast. All participants are in a listen-only mode. 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 Brian Goldberg, head of investor relations. Thank you. Please go ahead.

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. 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 in 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 furnished today on Form 6K. And with that, I'll turn it over to Daniel.

All right. 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 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. And our annual wrapped experience also toppled 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 also is 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 heading. 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 consumers. 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? 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 among prioritizing these three key elements based on a variety of considerations. 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 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 to continue 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 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 two provider of audiobooks behind Audible, which is notable given how entrenched the legacy players are. 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 the strength that we sit in today. So thank you, Paul, for these years. 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'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.