$SPOT Q3:
-MAU 381mm (+19% y/y, high end of guide)
-Premium 172mm (+19% y/y, midpoint of guide)
-Rev +26% (fx adj)
-Ad-Supported revs up 75% (13% of revs)
-Gross margin 26.7% (up 200bps y/y,above guide)
-ARPU up y/y from price increases
-FCF of 99mm EUR
More details to follow.
-MAU 381mm (+19% y/y, high end of guide)
-Premium 172mm (+19% y/y, midpoint of guide)
-Rev +26% (fx adj)
-Ad-Supported revs up 75% (13% of revs)
-Gross margin 26.7% (up 200bps y/y,above guide)
-ARPU up y/y from price increases
-FCF of 99mm EUR
More details to follow.
This is a good print. Let’s dive in.
MAUs DD growth across all regions, back to trend (after 2Q of misses)
Strength in RoW, specifically India, Philippines, Indonesia. Also called South Korea, Bangladesh, Pakistan.
Just in case These are huge population countries.
MAUs DD growth across all regions, back to trend (after 2Q of misses)
Strength in RoW, specifically India, Philippines, Indonesia. Also called South Korea, Bangladesh, Pakistan.
Just in case These are huge population countries.
Premium subs growth strong and in-line with trend. Helped by various partnerships with telcos, hardware providers and financial institutions.
Churn down q/q and up y/y (historic low, tough comp). Still expects churn to be down for the full year
Churn down q/q and up y/y (historic low, tough comp). Still expects churn to be down for the full year
Revenue strength was attributed to advertising, this is exactly what we want to see. Ek said “the days of 10% advertising revenues are behind us” and this seems to be the case now.
ARPU getting a lift from price increases, but don’t expect that to keep going as EM users grow
ARPU getting a lift from price increases, but don’t expect that to keep going as EM users grow
Advertising commentary is worth pointing out:
“Ad-Supported Revenue meaningfully outperformed, driven by higher sold impressions, increased CPMs, and accelerated demand within the Spotify Audience Network. The strength in advertising was broad-based across all sales channels…
“Ad-Supported Revenue meaningfully outperformed, driven by higher sold impressions, increased CPMs, and accelerated demand within the Spotify Audience Network. The strength in advertising was broad-based across all sales channels…
with the US and UK meaningfully exceeding expectations. Our music business was driven by growth in impressions, a meaningful improvement in sell-through rate, and double-digit CPM growth. Our Podcast business was driven by strong double-digit Y/Y growth at Spotify studios”
“The Spotify Audience Network continued to outperform driven by higher available inventory and incremental revenue from international sales. Since launch, the number of podcasts in our network has grown by more than 50%, nearly 1/5 Spotify advertisers are already participating.”
Gross margin – likely one of the most encouraging signs of the release:
“The Gross Margin improvement reflected a favorable revenue mix shift towards podcasts, marketplace activity, improved music advertising operating leverage, and Other Cost of Revenue efficiencies”
“The Gross Margin improvement reflected a favorable revenue mix shift towards podcasts, marketplace activity, improved music advertising operating leverage, and Other Cost of Revenue efficiencies”
Personalization remains a key priority in music and podcasting to drive higher engagement and lower retention.
Introduced enhanced playlists (you+algo), Blend (you+friend/crush), Episodes For You (recommended podcasts) and What’s New (notifications from creators you follow)
Introduced enhanced playlists (you+algo), Blend (you+friend/crush), Episodes For You (recommended podcasts) and What’s New (notifications from creators you follow)
Launched paid podcast subscriptions to all US creators with intentions to expand internationally.
Launched Q&A and polls for Anchor creators, which allows listeners to respond to short questions posed by show creators.
Launched Q&A and polls for Anchor creators, which allows listeners to respond to short questions posed by show creators.
“Two-Sided Marketplace, we continued to test Discovery Mode with record labels and distributors, where we saw Q/Q growth in customers and Gross Profit contribution. Sponsored Recommendations also continued to gain traction as we expanded into more international markets.”
with respect to 2SMP, it’s encouraging to see it contributing to Gross Profit, there’s no question this highly questioned initiative since the beginning is starting to bear fruit. Would like them to give more details of where they see it going though
Content:
Added 300K podcasts in Q. 3.2mm, vs. 2.9mm in Q2, incredible pace.
Among MAUs that engaged with podcasts, consumption trends remained strong (+20% Y/Y p/user) MoM retention rates continued to trend positively.
Added 300K podcasts in Q. 3.2mm, vs. 2.9mm in Q2, incredible pace.
Among MAUs that engaged with podcasts, consumption trends remained strong (+20% Y/Y p/user) MoM retention rates continued to trend positively.
“The % of MAUs that engaged with podcast content continued to increase throughout the quarter, marking an acceleration relative to Q2 trends”
Some would like this number given, but there are competitive reasons why they wouldn’t want to give it out. We’ll see on the call
Some would like this number given, but there are competitive reasons why they wouldn’t want to give it out. We’ll see on the call
32 O&E (originals&exclusives) releases in the US incl. Armchair Expert and Call Her Daddy
76 new releases Internationally with traction in India and Latam.
108 new podcasts in the Q (70% intl), strong number and I hope it keeps growing. This is right from the $NFLX playbook
76 new releases Internationally with traction in India and Latam.
108 new podcasts in the Q (70% intl), strong number and I hope it keeps growing. This is right from the $NFLX playbook
Interesting marketing initiative by partnering with Drake:
“Spotify launched a global partnership with Drake including an offer for fans and new users to stream the album free on-demand for the first two weeks of release.”
“Spotify launched a global partnership with Drake including an offer for fans and new users to stream the album free on-demand for the first two weeks of release.”
Ek on potential Advertising size:
“Long term at the very least 20% of revenues but possibly as high as 30 or 40% in 5-10years”
Increased inventory bringing increased demand, music ads also seeing strength.
“Long term at the very least 20% of revenues but possibly as high as 30 or 40% in 5-10years”
Increased inventory bringing increased demand, music ads also seeing strength.
Two-sided marketplace:
“we have proven the product market fit, we’re iterating the product and rolling it out”
“there’s a lot more we can do, and Live is one of those opportunities”
“Marketplace contributing, growing above expectations. Really pleased with how it’s grown”
“we have proven the product market fit, we’re iterating the product and rolling it out”
“there’s a lot more we can do, and Live is one of those opportunities”
“Marketplace contributing, growing above expectations. Really pleased with how it’s grown”
Some Highlights from Daniel Ek’s prepared remarks $SPOT
Advertising opportunity, Linear Radio share
cc @S_curvecap
Advertising opportunity, Linear Radio share
cc @S_curvecap
$SPOT The Podcast journey and Success in Audio
First time management explicitly says they are #1 in the US (and 60+ countries)
Success is attributable to hundreds, if not thousands of little improvements.
First time management explicitly says they are #1 in the US (and 60+ countries)
Success is attributable to hundreds, if not thousands of little improvements.
Why Velocity matters:
“Because we are focused on creators and consumers we prioritize speed and we adapt quickly.”
“Because we are focused on creators and consumers we prioritize speed and we adapt quickly.”
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