2023 ANNUAL REPORT
A Note From the CEO
As I sit down to write this letter, I find myself reflecting on the incredible journey we’ve embarked on together over the past year. It has been a year filled with significant milestones, challenges that tested our resilience, and triumphs that showcased the extraordinary talent and dedication within our team. I want to take this opportunity to share our achievements, celebrate our culture, and outline our vision as we move forward.
Growth and Engagement
We’ve reached remarkable heights this year, with over 500 million monthly active users now enjoying our platform. This milestone is not just a number; it represents our collective efforts to connect people through the power of music and podcasts. Each of you plays a vital role in this success—whether you’re developing innovative features, crafting compelling marketing campaigns, or ensuring our infrastructure runs smoothly. Your commitment to enhancing user experiences has set Spotify apart in an increasingly competitive landscape.
Our personalized playlists, such as Discover Weekly and Release Radar, have helped listeners uncover new artists and genres, transforming how they engage with music. We’ve also seen user-generated playlists gain traction, creating a community of music lovers who share their passions and recommendations. The increase in engagement metrics is a testament to your creativity and hard work, as users are spending more time exploring, listening, and discovering.
Artist-Centric Initiatives
At the heart of Spotify’s mission is our unwavering commitment to artists. This year, we launched several initiatives designed to empower creators and ensure they are fairly compensated for their work. Spotify for Artists has transformed the way musicians interact with their audiences and understand their analytics. By providing artists with the tools they need to navigate the ever-changing music landscape, we’re helping them build sustainable careers.
We’re also proud to have rolled out new monetization options that give artists more control over their revenue streams. Direct artist payments are just one way we’re working to create a fairer ecosystem. Our
goal is to ensure that every artist has the opportunity to thrive, regardless of their background or genre.
We have prioritized diversity and inclusion across our platform, launching initiatives that spotlight underrepresented voices in the music industry. Programs like EQUAL, which supports women in music, and various partnerships with organizations focused on promoting diversity, reflect our commitment to fostering an inclusive environment where every artist can succeed. The stories and experiences of diverse artists enrich our platform and resonate with listeners worldwide.
Sustainability and Community Impact
As a global leader in the streaming industry, we recognize our responsibility to address climate change and contribute positively to our communities. This year, we set ambitious goals aimed at achieving a carbonneutral footprint by 2030. We’re investing in renewable energy solutions and collaborating with industry partners to drive sustainable practices throughout our operations. Music has the power to inspire change, and we want to ensure that future generations can enjoy it in a healthy, vibrant environment.
Our community initiatives have also made significant strides. From supporting mental health awareness campaigns to funding local music programs, we’ve made a positive impact in communities around the world. Our partnership with organizations that provide music education to underserved youth is a testament to our belief that music can change lives. By investing in the communities we serve, we strengthen our connection with listeners and foster a culture of giving back.
Innovations and Future Vision
Looking ahead, we are excited about the possibilities that await us. The rapid advancement of technology offers us new tools to enhance user experiences and create unique content. We are actively exploring AI-driven content creation and immersive audio experiences, which have the potential to revolutionize how people connect with music. Imagine a world
Daniel Ek CEO OF SPOTIFY
where personalized music experiences adapt in real time to reflect individual moods and preferences— this is the future we are working towards.
We are also committed to expanding our podcasting capabilities. Podcasts are an increasingly popular medium, and our investments in exclusive content and partnerships with creators have positioned us as a leader in this space. The storytelling power of podcasts complements our music offering and allows us to reach new audiences, further solidifying our place in the audio landscape.
Fostering a Strong Culture
As we navigate the future, I want to emphasize the importance of our culture. Spotify thrives on creativity, collaboration, and inclusivity. We encourage every team member to bring their unique perspectives and ideas to the table. Your voices are essential to our success, and I urge you to continue to speak up, innovate, and push the boundaries of what is possible.
The passion and dedication I see every day inspire me, and I am grateful to lead such an extraordinary team. Together, we have built a vibrant platform that connects
millions of people to the music and stories they love. As we look to the future, let’s continue to embrace our core values and remain committed to our mission.
Conclusion
In closing, I want to thank each of you for your hard work and dedication. The journey we are on is remarkable, and together, we can shape the future of music and audio. Your creativity, passion, and commitment to our mission are what make Spotify truly special.
As we move forward, let’s continue to embrace the challenges and opportunities that lie ahead. The road may not always be easy, but I am confident that, together, we can overcome any obstacle and reach new heights.
Thank you for being part of this incredible journey.
Daniel Ek CEO, Spotify
ABOUT Meet the Spotify Team
Daniel
Ek CEO OF SPOTIFY
Shishir Mehrotra DIRECTOR
Martin Lorentzon COFOUNDER AND DIRECTOR
Heidi O’Neill DIRECTOR
Christopher Marshall
LEAD INDEPENDENT DIRECTOR
Ted Sarandos DIRECTOR
Barry McCarthy DIRECTOR
Thomas Staggs DIRECTOR
ABOUT Meet the Spotify Team
Mona Sutphen DIRECTOR
Dustee Jenkins CHIEF PUBLIC AFFAIRS OFFICER
Warrior DIRECTOR
Eve Konstan GENERAL COUNSEL
Padmasree
Christian Luiga
CHIEF FINANCIAL OFFICER
Alex Norström
CO-PRESIDENT, CHIEF BUSINESS OFFICER
Katarina Berg
CHIEF HUMAN RESOURCES OFFICER
Gustav Söderström
CO-PRESIDENT, CHIEF PRODUCT & TECHNOLOGY OFFICER
ABOUT Finding Your Soundtrack to Life
A. History and Development of the Company
We are a Luxembourg public limited liability company (société anonyme), which means that shareholders’ liability is limited to their contributions to the company. The shares forming the share capital of a Luxembourg public limited liability company (société anonyme) may be publicly traded and registered on a stock exchange. Our legal name is “Spotify Technology S.A.” and our commercial name is “Spotify.” We were incorporated on December 27, 2006 as a Luxembourg private limited liability company (société à responsabilité limitée) and were transformed, on March 20, 2009, into a Luxembourg public limited liability company (société anonyme). The principal legislation under which we operate, and under which our ordinary share capital has been created, is the law of August 10, 1915 on commercial companies, as amended, and the law of December 19, 2002 on the register of commerce and companies and the accounting and annual accounts of undertakings and the regulations, as
amended, made thereunder. We are registered with the Luxembourg Trade and Companies’ Register under number B.123.052. Our registered office is located at 5, place de la Gare L-1616, Luxembourg, Grand Duchy of Luxembourg, and our principal operational office is located at Regeringsgatan 19, 111 53 Stockholm, Sweden. Our agent for U.S. federal securities law purposes is Eve Konstan, General Counsel, 150 Greenwich Street, 63rd Floor, New York, New York 10007. On March 2, 2021, Spotify USA Inc. issued US$1,500 million in aggregate
Your soundtrack to life one playlist at a time!
principal amount of the Exchangeable Notes. Net proceeds from the issuance of the Exchangeable Notes were €1,223 million after deducting transaction costs. See Note 19 to our consolidated financial statements, included elsewhere in this report, for further information
regarding our Exchangeable Notes. On March 29, 2021, we acquired Betty Labs Incorporated for a total purchase consideration of €57 million. The acquisition allowed us to explore the live audio space.
On June 17, 2021, we acquired Podz, Inc., a technology company focused on the podcast discovery experience, for a total purchase consideration of €45 million. The acquisition allows us to complement and accelerate our focused efforts to drive podcast discovery, deliver listeners the right content at the right time, and accelerate growth of the podcast category worldwide.
During February 2022, we acquired In Defense of Growth Inc. (“Podsights”) and Chartable Holding, Inc. (“Chartable”) to provide improved podcast ad measurement and analytics services for a total purchase consideration of €83 million. These acquisitions allow us to expand and scale our podcast monetization and product offering for advertisers and publishers.
On June 15, 2022, we acquired Findaway World, LLC (“Findaway”), a digital audiobook distribution platform, for a total purchase consideration of €117 million. This acquisition allows us to accelerate our audiobook content offering.
On July 11, 2022, we acquired Sonantic Limited (“Sonantic”), an artificial intelligence voice platform, for a total purchase consideration of €93 million. This acquisition allows us to expand text-tospeech capabilities across our platform.
B. Business Overview
Our mission is to unlock the potential of human creativity by giving a million creative artists the opportunity to live off their art and billions of fans the opportunity to enjoy and be inspired by it. We are the world’s most popular audio streaming subscription service with a community of 602 million MAUs, including 236 million Premium Subscribers, across 184 countries and territories as of December 31, 2023.
ABOUT The World's Most Popular Audio Streaming Subscription Service
Spotify has transformed the way people access and enjoy music and podcasts. Today, millions of people around the world have access to over 100 million tracks and 5 million podcast titles through Spotify whenever and wherever they want. In September 2022, we made available a catalog of audiobooks in the United States that our users may purchase on the web and listen to on our platform alongside our catalog of music and podcasts. In November 2022, we extended audiobooks availability to the United Kingdom, Ireland, Australia, and New Zealand. Over 350,000 audiobooks are available à la carte to listen to on Spotify in these markets. During 2023, we launched a new audiobooks experience on our Premium Service, offering 15 hours of access a month to more than 200,000 audiobooks as part of a subscription to the Premium Service. Currently, audiobooks are available for eligible Premium Subscribers in the U.S., U.K., and Australia.
We have transformed the music industry by allowing users to move from a “transaction-based” experience of buying and owning music to an “accessbased” model, which allows users to stream music on demand. In contrast, traditional radio relies on a linear distribution model in which stations and channels are programmed to deliver a limited song selection with little freedom of choice.
We are actively investing in podcasts, audiobooks, and other forms of alternative and spoken word content to complement the music library available through our platform. We believe offering a more diverse selection of content will lead to a more enriching experience and higher user engagement.
Spotify is more than an audio streaming service. We are in the discovery business. Every day, fans from around the world trust our brand to guide them to entertainment that they would never have discovered on their own. If discovery drives customer satisfaction, and customer satisfaction drives engagement, and engagement drives discovery, we believe Spotify wins and so do our users. Our brand reflects culture— and occasionally creates it—by turning vast and intriguing listening data into compelling stories that remind people of the role music, podcasts, and other audio content play in their lives and encourage new fans to join Spotify each week.
Building a Two-Sided Marketplace
We continue to build a two-sided marketplace for users and creators, which leverages our relationships, data analytics, and software. We have been instrumental in reshaping the way in which our users enjoy, discover, and share audio content. With our marketplace strategy, we are empowering creators by offering unique insights and developing new tools designed to give creators more power and control and by unlocking new monetization opportunities for creators. Spotify is uniquely positioned to offer creators and fans access to one another, and to provide creators with analytics and tools to help them better understand their fans, to support themselves, and to effectively monetize their creative work.
Our Business Model
We offer both Premium and Ad-Supported Services. Our Premium and Ad-Supported Services live independently, but thrive together. We believe this business model has allowed us to achieve scale with attractive unit economics and is a critical part of our success. Our Ad-Supported Service serves as a funnel, driving a significant portion of our total gross added Premium Subscribers. We believe our Ad-Supported Service is a strong and viable standalone product with considerable long-term opportunity for growth in Ad-Supported Users and revenue. We are currently in 184 countries and territories. On a geographic basis, all four of our major regions are growing. Europe is our largest region with 169 million MAUs, accounting for 28% of our total MAUs as of December 31, 2023, an increase of 14% from the prior year. In our North America region, MAUs increased by 11% from December 31, 2022 to December 31, 2023 and now account for 19% of our MAUs. Our two fastest growing regions are Latin America, with 21% of our MAUs, an increase of 25% from December 31, 2022 to December 31, 2023, and the rest of the world, with 32% of our MAUs, an increase of 40% from December 31, 2022 to December 31, 2023. Our Ad-Supported Users and Premium Subscribers spend significant time engaging with our Service. Combined, our audience streamed 165 billion hours of content for the year ended December 31, 2023, an increase of 25% compared to the year ended December 31, 2022.
Premium Service
Our Premium Service provides Premium Subscribers with unlimited online and offline high-quality streaming access to our catalog of music and podcasts. Premium Subscribers in select markets have 15 hours of access a month to audiobooks as part of a subscription to the Premium Service, currently available to eligible Premium Subscribers in the U.S., U.K. and Australia. Premium Subscribers can also purchase audiobooks on an à la carte basis in select markets. In addition to accessing our catalog on computers, tablets, and mobile devices, users can connect through speakers, receivers, televisions, cars, game consoles, and smart devices. The Premium Service offers a music listening experience without commercial breaks.
levels, and willingness to pay for an audio service. Our Family Plan consists of one primary Premium Subscriber and up to five additional sub-accounts, allowing up to six Premium Subscribers per Family Plan subscription. Our Duo Plan consists of one primary subscriber and one additional sub-account, allowing up to two Premium Subscribers per Duo Plan subscription.
In addition, as we have entered into new markets where recurring subscription services are less common, we have expanded our subscription products to include prepaid options and durations other than monthly (both longer and shorter durations), as well as expanded payment options.
At Spotify, we offer various pricing plans to fit YOUR financial needs.
We generate revenue for our Premium segment through the sale of subscriptions to the Premium Service. The Premium Service is primarily sold directly to end users. The Premium Service is also sold through partners who are generally telecommunications companies that bundle the subscription with their own services or collect payment for the stand-alone subscriptions from their end customers. Premium partner subscription revenue is based on a persubscriber rate in a negotiated partner agreement. We also bundle the Premium Service with other services and products.
We offer a variety of subscription pricing plans for our Premium Service, including our Standard Plan, Family Plan, Duo Plan, and Student Plan, among others, to appeal to users with different lifestyles and across various demographics and age groups. Our pricing varies by plan and is adapted to each local market to align with consumer purchasing power, general cost
Revenue from our Premium segment is a function of the number of Premium Subscribers who subscribe to our Premium Service. As of December 31, 2023 and 2022, we had 236 million and 205 million Premium Subscribers, respectively. New Premium Subscribers are primarily sourced from the conversion of our AdSupported Users. Through both our online platform and external marketing efforts, we engage our AdSupported Users by highlighting key features that encourage conversion to our subscription offerings. These efforts include product links, campaigns targeting existing users, and performance marketing across leading social media platforms. Additionally, new subscriber growth is also driven by the success of converting users from our trial programs to fulltime Premium Subscribers. These trial campaigns typically offer certain features of our Premium Service for free or at a discounted price for a period of time.
Ad-Supported Service
Our Ad-Supported Service has no subscription fees and generally provides Ad-Supported Users with limited on-demand online access to our catalog of music and unlimited online access to our catalog of podcasts on their computers, tablets, and compatible mobile devices. Ad-Supported Users can also purchase audiobooks on an à la carte basis in select markets. Our Ad-Supported Service serves as both a Premium Subscriber acquisition channel and a robust option for users who are unable or unwilling to pay a monthly subscription fee but still want to enjoy access to a wide variety of high-quality audio content.
We generate revenue for our Ad-Supported segment primarily from the sale of display, audio, and video advertising delivered through advertising impressions across our music and podcast content. We generally enter into arrangements with advertising agencies that purchase advertising on behalf of their clients and we also enter into arrangements directly with some large advertisers. These advertising arrangements are typically sold on a cost-per-thousand basis and are evidenced by an insertion order that specifies the terms of the arrangement such as the type of advertising product, pricing, insertion dates, and number of impressions or downloads in a stated period (“Insertion Order”). Additionally, we generate revenue through arrangements with certain advertising automated exchanges, internal self-serve, and advertising marketplace platforms to distribute advertising inventory for purchase on a cost-per-thousand basis. These advertising arrangements typically specify the type of advertising product, pricing, insertion dates, and number of impressions in a stated period.
Revenue from our Ad-Supported segment is dependent primarily on the number and hours of engagement of our Ad-Supported Users and podcast listeners and our ability to provide innovative advertising products that are relevant to those users and enhance returns for our advertising partners. Revenue is recognized based on the number of impressions delivered.
Our advertising strategy centers on the belief that advertising products that are based in music and podcasts and are relevant to Ad-Supported Users and podcast listeners can enhance user experiences and provide even greater returns for advertisers. We have historically introduced, and continue to introduce, new advertising products across both music and podcast content. Offering advertisers additional ways to purchase advertising on an automated basis is a key way that we continue to expand our portfolio of advertising products and enhance advertising revenue. Furthermore, we continue to focus on analytics and measurement tools to evaluate, demonstrate, and improve the effectiveness of advertising campaigns on our platform.
In February 2021, we announced the Spotify Audience Network (“SPAN”), an audio advertising marketplace that connects advertisers to listeners across our owned and exclusive podcasts, podcasts from enterprise publishers via Megaphone, and podcasts from emerging creators via Spotify for Podcasters. Through SPAN, we provide hosting and ad-insertion capabilities for audio publishers that allow us to sell targeted advertising to brand partners that enables them to reach listeners both on and off our platform. Some of these agreements require us to share associated revenues and can include minimum guarantees.
Achievements During the Semester
AI DJ Launch
During the quarter, we launched a beta version of AI DJ to users in North America to allow for deeper discovery and personalization. AI DJ combines the power of our personalization technology with cuttingedge generative AI and a realistic AI voice enabled by technology from our previous acquisition of Sonantic. The DJ currently attracts millions of active users each week, representing more than 25% of user consumption on days when they listen to the DJ.
2023 Stream On Creator Highlights
Announced ways to help artists amplify their content with campaign and audience development tools such as Showcase and Discovery Mode self-serve.
Invited new listeners and fans to connect with artists and build fandom with the launch of Countdown Pages, Spotify Clips and concert integrations in-app.
Created a one-stop-shop for creators to access our tools, including in-depth analytics and the feature set of our podcast creation platform, Anchor, with our newly relaunched Spotify for Podcasters platform.
Enhanced podcast monetization opportunities with our new Patreon partnership announcement which allows podcasters to offer Patreonexclusive content to listeners on Spotify.
Redesigned Spotify User Experience
At Stream On, we announced one of the biggest changes to our user experience. With this new design, we’re giving fans an even more active role in the audio discovery process and giving creators even more space to share their work. Powered by advanced recommendations, new visual canvases and a completely new and interactive design, we’re making discovering new audio easier than ever before, helping introduce users to their next favorite artist, podcast or book.
Podcasting
Announced a multiyear exclusive video partnership with Markiplier for Distractible and Go! My Favorite Sports Team.
Brought British journalist Louis Theroux to the platform with the announcement of his new Spotify original podcast, the Louis Theroux Podcast.
Two new publishers join the Spotify Audience Network: NPR & Immediate Media.
Revealed that Forbidden Fruits with Julia Fox and Niki Takesh will return for a Season 2 and the new episodes will be released as an all-video podcast.
Music
Morgan Wallen released his third studio album One Thing At A Time breaking records for the moststreamed album in a single day by a male artist.
In January, Miley Cyrus released her highly anticipated new single Flowers which became the moststreamed song in a single week in Spotify history.
Debuted RapCaviar Presents, a sixepisode documentary on Hulu exploring the music and lives of rap’s biggest stars.
Rosalia became the first artist to be celebrated across both FC Barcelona’s men’s and women’s teams, with a special jersey for the El Clásico matches in March.
€ 2591
Spotify Total Gross Profit in 2021
€0 €5000
€ 2926
Spotify Total Gross Profit in 2022
€0 €5000
€ 3397
Spotify Total Gross Profit in 2023
€0 €5000
FINANCES Executive Summary
We ended 2023 with strong Q4 performance, as all of our KPIs met or exceeded guidance. MAU net additions of 28 million surpassed guidance by 1 million. Subscriber net additions of 10 million were also ahead by 1 million. Revenue grew 20% Y/Y on a constant currency* basis, reflecting another ~300 bps of sequential acceleration vs. Q3’23. Gross Margin of 26.7% was also ahead and up 140 bps Y/Y, while Operating Loss of (€75) million was better due to lower marketing and personnel and related costs. Excluding €143 million in charges associated with
efficiency actions taken late in the quarter (which were incorporated into guidance), we generated €68 million in Adjusted Operating Income*, more than double the Operating Income we achieved in Q3’23. Free Cash Flow* was €396 million in the quarter. With revenue and profitability trends both inflecting favorably heading into 2024, we view the business as well positioned to deliver improving growth and profitability as we progress towards delivering against our Investor Day goals.
FINANCES
Key Highlights: Actuals vs. Guidance
USERS
FINANCIALS
FINANCES
Key Highlights
Record High Q1 MAU Growth of 26 Million Net Additions
• MAUs grew 22% Y/Y to 515 million, 15 million above guidance. Net additions of 26 million represented our largest ever Q1 growth and second largest quarterly net addition performance in our history
• Broad-based MAU outperformance driven by higher reactivations, improved retention and marketing efficiencies
• Premium Subscribers grew 15% Y/Y to 210 million, 3 million above guidance, aided by top-of-funnel strength
• Total Revenue grew 14% Y/Y to €3.0 billion
• Premium Revenue grew 14% Y/Y to €2.7 billion
• Ad-Supported Revenue grew 17% Y/Y to €329 million
• Gross Margin finished above guidance at 25.2%, primarily as a result of favorability in Other Cost of Revenue
Multiple updates to the Spotify 14% Y/Y Revenue Growth and 25.2% Gross Margin
FINANCES Financial Summary
FINANCES Revenue
Consistent Premium Growth, Led by Subscribers
Premium Revenue grew 14% Y/Y to €2,713 million (or 13% Y/Y constant currency, comparable to Q4’22 performance), reflecting subscriber growth of 15% Y/Y and Premium ARPU¹ decline of 1% Y/Y to €4.32 (or down 2% constant currency). Excluding the impact of FX, ARPU performance was slightly impacted by product and market mix.
Broad Based Ad-Supported Growth
Ad-Supported revenue grew 17% Y/Y with doubledigit Y/Y growth across nearly all regions. Music advertising revenue grew low double-digits Y/Y, reflecting double-digit Y/Y growth in impressions sold, partially offset by softer pricing due to the current macroeconomic environment. Podcast revenue grew nearly 20% Y/Y, driven by Original and Exclusive podcasts where sold impressions grew strong doubledigits and CPMs increased high single-digits. The Spotify Audience Network saw double digit Q/Q growth in participating publishers and shows.
OVERVIEW Monthly Active Users (MAUs)
Our Premium Subscribers grew 15% Y/Y to 210 million, up from 205 million last quarter. Quarterly performance versus our guidance was impacted by:
• Outperformance across all regions, led by Europe and Latin America
• Higher top-of-funnel growth driving increased subscribers
• Regional campaign outperformance and continued strength in multi-user plans Europe
OVERVIEW Premium Subscribers
Total MAUs grew 22% Y/Y to 515 million, up from 489 million last quarter and above our guidance by 15 million. Quarterly performance versus our guidance was impacted by:
• Outperformance across all regions driven by reactivations and a Q/Q decrease in Ad-Supported MAU churn
• Record Q1 net additions in nearly all age demographics across both developed and developing markets
• Continued momentum as a result of increased brand awareness, retention improvements and performance marketing efficiencies
PREMIUM SUBSCRIBERS (Q1 2023)
Europe
North America
Latin America
Rest of World
OVERVIEW
Future Outlooks
Webcast Information
We will host a live question and answer session starting at 8:00 a.m. ET today on investors.spotify. com. Daniel Ek, our Founder and CEO, and Paul Vogel, our Chief Financial Officer, will be on hand to answer questions submitted through slido.com using the event code #SpotifyEarningsQ123. Participants also may join using the listen-only conference line by registering through the following site: https:// conferencingportals.com/event/txExvogt We use investors.spotify.com and newsroom.spotify.com websites as well as other social media listed in the “Resources – Social Media” tab of our Investors website to disclose material company information.
Use of Non-IFRS Measures
To supplement our financial information presented in accordance with IFRS, we use the following nonIFRS financial measures: Revenue excluding foreign exchange effect, Premium revenue excluding foreign exchange effect, Ad-Supported revenue excluding foreign exchange effect, Operating expense excluding foreign exchange effect, and Free Cash Flow. Management believes that Revenue excluding foreign exchange effect, Premium revenue excluding foreign exchange effect, Ad-Supported revenue excluding foreign exchange effect, Operating expense excluding foreign exchange effect, Sales and marketing expense excluding foreign exchange effect, Research and development expense excluding foreign exchange effect, and General and administrative expense excluding foreign exchange effect are useful to investors because they present measures that facilitate comparison to our historical performance. However, these should be considered in addition to, not as a substitute for or superior to, Revenue, Premium revenue, Ad-Supported revenue, Operating expense, Sales and marketing expense, Research and development expense, and General and administrative expense, or other financial measures prepared in accordance with IFRS. Management believes that Free Cash Flow is useful to investors because it presents a measure that approximates the amount of cash generated that is available to repay debt obligations, to make investments, and for certain other activities that exclude certain infrequently occurring and/or non-cash items. However, Free Cash Flow should be considered in addition to, not as a substitute for or superior to, net cash flows (used in)/from operating activities or
other financial measures prepared in accordance with IFRS. For more information on these nonIFRS financial measures, please see “Reconciliation of IFRS to Non-IFRS Results” section below.
Forward Looking Statements
This shareholder update contains estimates and forward-looking statements. All statements other than statements of historical fact are forward-looking statements. The words “may,” “might,” “will,” “could,” “would,” “should,” “expect,” “plan,” “anticipate,” “intend,” “seek,” “believe,” “estimate,” “predict,” “potential,” “continue,” “contemplate,” “possible,” and similar words are intended to identify estimates and forward-looking statements. Our estimates and forward-looking statements are mainly based on our current expectations and estimates of future events and trends, which affect or may affect our businesses and operations. Although we believe that these estimates and forward-looking statements are based upon reasonable assumptions, they are subject to numerous risks and uncertainties and are made in light of information currently available to us. Many important factors may adversely affect our results as indicated in forward-looking statements. These factors include, but are not limited to: our ability to attract prospective users, retain existing users, and monetize our products and services; competition for users, user listening time, and advertisers; risks associated with our international operations and our ability to manage our growth; risks associated with our new products or services and our emphasis on long-term user engagement over short-term results; our ability to predict, recommend, and play content that our users enjoy; our ability to be profitable or generate positive cash flow on a sustained basis; our ability to convince advertisers of the benefits of our advertising offerings; our ability to forecast or optimize advertising inventory amid emerging industry trends in digital advertising; our ability to generate revenues from podcasts, audiobooks, and other non-music content; potential disputes or liabilities associated with content made available on our premium service and ad-supported service (collectively, the “Service”); risks relating to acquisitions, investments, and strategic alliances; our dependence upon third-party licenses for most of the content we stream; our lack of control over thirdparty content providers who are concentrated and can unilaterally affect our access to content; our ability to comply with complex license agreements; our ability to
accurately estimate royalty payments under our license agreements and relevant statutes; the limitations on our operating flexibility due to financial commitments required under certain of our license agreements; our ability to identify the compositions embodied in sound recordings and ownership thereof in order to obtain licenses or comply with existing license agreements; assertions by third parties of infringement or other violations by us of their intellectual property rights; our ability to protect our intellectual property; the dependence of streaming on operating systems, online platforms, hardware, networks, regulations, and standards that we do not control; our ability to maintain the integrity of our technology structure and systems or the security of confidential information; undetected errors, bugs or vulnerabilities in our products; interruptions, delays, or discontinuations in service arising from our systems or systems of third parties; changes in laws or regulations affecting us; risks relating to privacy and data security; our ability to maintain, protect, and enhance our brand; risks
Every genre of music, all at your fingertips.
associated with increased scrutiny of environmental, social, and governance matters; payment-related risks; our dependence on key personnel and ability to attract, retain, and motivate highly skilled employees; our ability to access to additional capital to support growth; risks relating to currency exchange rate fluctuations and foreign exchange controls; the impact of economic, social, or political conditions, including the continuing effects of the COVID-19 pandemic, rising inflation and interest rates, financial market volatility resulting from recent bank failures, the continued conflict between Russia and Ukraine, and supply chain disruptions; our ability to accurately estimate user metrics and other estimates; our ability to manage and remediate attempts to manipulate streams and attempts to gain or provide unauthorized access to certain features of our Service; risks related to our indebtedness, including risks related to our Exchangeable Notes; fluctuation of our operating results and fair market value of ordinary shares; tax-related risks; the concentration of voting power among our founders, which limits shareholders’ ability to influence our governance and business; and risks related to our status as a foreign private issuer and a Luxembourg company. A detailed discussion of these and other risks and uncertainties that could
cause actual results and events to differ materially from our estimates and forward-looking statements is included in our filings with the U.S. Securities and Exchange Commission (“SEC”), including our Annual Report on Form 20-F filed with the SEC on February 2, 2023, as updated by subsequent reports filed with the SEC. We undertake no obligation to update forwardlooking statements to reflect events or circumstances occurring after the date of this shareholder update.
Rounding
Certain monetary amounts, percentages, and other figures included in this update have been subject to rounding adjustments. The sum of individual metrics may not always equal total amounts indicated due to rounding.