Spotify Q1 2023

Table of Contents

USER SUMMARY:

Total Monthly Active Users (MAUs) increased from 422M in Q1 2022 to 515M in Q1 2023 (Y/Y growth: 22%).
Premium Subscribers grew from 182M in Q1 2022 to 210M in Q1 2023 (Y/Y growth: 15%).
Ad-Supported MAUs increased from 252M in Q1 2022 to 317M in Q1 2023 (Y/Y growth: 26%).

Premium revenue increased from €2,379M in Q1 2022 to €2,713M in Q1 2023 (Y/Y growth: 14%).
Ad-Supported revenue grew from €282M in Q1 2022 to €329M in Q1 2023 (Y/Y growth: 17%).
Total Revenue increased from €2,661M in Q1 2022 to €3,042M in Q1 2023 (Y/Y growth: 14%).
Gross Profit grew from €671M in Q1 2022 to €766M in Q1 2023 (Y/Y growth: 14%).
Gross Margin remained relatively stable, ranging from 24.6% to 25.3% over the period.
Operating Income remained negative, with an Operating Margin ranging from (0.2%) to (7.5%).

Net Cash Flows From Operating Activities ranged from €37M to (€70M) over the period.
Free Cash Flow ranged from €22M to (€73M) over the period.
Cash & Cash Equivalents, Restricted Cash & Short Term Investments remained stable, ranging from €3.4B to €3.7B.

Exceptionally strong user growth in Q1, with Total Monthly Active Users (MAUs) reaching 515 million.
Largest Q1 net additions in history (26 million quarter over quarter), second largest all time (after Q4 of last year).
Record Q1 net additions across nearly all age demographics in both developed and developing regions.
Premium Subscribers reached 210 million, 3 million ahead of guidance, with strength across all regions.
Strong engagement trends, including year over year growth in content hours per MAU and positive trends in DAU/MAU ratio and churn.
Revenue grew 14% Y/Y to over €3.0 billion, slightly behind forecast due to modest underperformance in advertising.
First Q1 in Spotify history with over $300 million in ad revenue.
Gross Margin of 25.2%, above guidance by 30 basis points.
Operating Expenses growth lower than forecast, Operating Loss ahead of guidance by €38 million (includes €44 million of severance charges).
Positive Free Cash Flow of €57 million in Q1.

Forecasting 530 million MAUs (increase of 15 million) and 217 million subscribers (increase of 7 million).
Forecasting €3.2 billion in Total Revenue, Gross Margin of roughly 25.5%, and Operating Loss of approximately €129 million.
Currency translation benefits expected to reverse in Q2 due to weakening US dollar relative to Euro (300 bp headwind to growth).
Excluding currency effect, constant currency Revenue would be closer to €3.3 billion (14% Y/Y growth vs. 13% in Q1).
Expecting steady ramp in Gross Margins and sequential improvements in Operating Loss throughout 2023.