Spotify(US:SPOT)2023-10-23 16:00User Growth - Total Monthly Active Users (MAUs) grew 26% Y/Y to 574 million, exceeding guidance by 2 million[8] - Total Monthly Active Users (MAUs) expected to reach 601 million, implying an addition of approximately 27 million net new MAUs in Q4 2023[52] Premium Subscribers - Premium Subscribers increased 16% Y/Y to 226 million, also 2 million above guidance[8] - Premium Subscribers grew 16% year-over-year to 226 million, up from 220 million last quarter[40] - Total Premium Subscribers projected to be 235 million, implying an addition of approximately 9 million net new subscribers in Q4 2023[52] Financial Performance - Total Revenue reached €3.357 billion, growing 11% Y/Y, with a 17% increase on a constant currency basis[13] - Revenue for Q3 2023 was €3.357 billion, an increase from €3.036 billion in Q3 2022[63] - IFRS revenue for Q3 2023 was €3,357 million, representing an 11% year-over-year increase from €3,036 million in Q3 2022[69] - Revenue excluding foreign exchange effects for Q3 2023 was €3,545 million, reflecting a 17% year-over-year increase[69] - Total revenue for Q4 2023 is expected to be €3.7 billion, with a 300 basis points headwind to growth year-over-year due to foreign exchange rate movements[52] Profitability - Operating Income was €32 million, a significant turnaround from an operating loss of €247 million in Q2 2023[9] - Operating income is expected to be €37 million, based on a Q3 close share price of $154.64[52] - Net income for Q3 2023 was €65 million, a significant improvement from a net loss of €166 million in Q3 2022[66] - Net income attributable to owners of the parent for Q3 2023 was €65 million, a significant recovery from a net loss of €302 million in Q2 2023 and a loss of €166 million in Q3 2022[67] - Basic and diluted earnings per share for Q3 2023 were €0.33, compared to a loss of €1.55 in Q2 2023 and a loss of €0.99 in Q3 2022[67] Cash Flow and Liquidity - Free Cash Flow for the quarter was €216 million, contributing to a strong liquidity position with €3.8 billion in cash and equivalents[31] - Free cash flow for Q3 2023 was €216 million, indicating a positive cash generation compared to previous quarters[73] - Cash and cash equivalents at the end of Q3 2023 were €2.615 billion, up from €2.851 billion at the end of Q3 2022[66] Cost Management - Operating Expenses declined 13% Y/Y, driven by lower marketing and personnel costs[27] - Operating expenses for Q3 2023 were €853 million, down 13% from €978 million in Q3 2022[71] - General and administrative expenses for Q3 2023 were €129 million, down 19% from €160 million in Q3 2022[71] - Research and development expenses for Q3 2023 were €369 million, a slight decrease of 4% from €386 million in Q3 2022[71] Revenue Streams - Ad-Supported Revenue grew 16% Y/Y to €447 million, with music advertising revenue increasing nearly 20% Y/Y[15] - Ad-supported revenue for Q3 2023 was €447 million, a 16% increase from €385 million in Q3 2022[69] - Premium revenue for Q3 2023 was €2,910 million, a 10% increase from €2,651 million in Q3 2022[69] Product Development - New features launched include AI Voice Translation for podcasts and a tool for artists called Showcase[8] - Expansion of AI DJ to 50 additional markets, enhancing user experience and engagement[8] Gross Margin - Gross Margin improved to 26.4%, up 166 bps Y/Y, reflecting better podcast trends and marketplace growth[20] - Gross margin is projected to be 26.6%, primarily driven by year-over-year improvement in podcasting, music, and other cost of revenue[52]