Summary of Spotify Technology Conference Call (November 13, 2025) Company Overview - **Company**: Spotify Technology (NYSE: SPOT) - **Event**: Conference Call - **Date**: November 13, 2025 Key Points Industry and Company Position - Spotify is positioned as a leading global tech company focused on music, podcasts, and audiobooks, emphasizing its technological foundation and global reach [5][6][8] - The company aims to achieve over 1 billion monthly active users (MAU) and gross margins in the 35-40% range, with significant progress noted since 2022 [8][10] Financial Performance and Growth - Spotify has increased its user base by nearly 300 million and added 100 million subscribers since 2022, demonstrating strong growth [9][10] - The company reported over 20% growth compared to the previous year, with expectations for continued profitability and growth into 2025 [10] - Gross margins are expected to grow, with typical seasonal declines between Q4 and Q1 due to advertising revenue fluctuations [49][50] Leadership Changes - Daniel Ek transitioned from CEO to Executive Chairman, with Alex and Gustaf stepping into co-CEO roles. This change is seen as a continuation of existing leadership dynamics rather than a significant shift [11][12][15] Engagement and User Behavior - Engagement metrics, including time spent on the platform, are critical indicators of value creation for users. Increased engagement is noted across music, audiobooks, and podcasts [18][20] - The introduction of new verticals (audiobooks and podcasts) has led to increased user engagement without cannibalizing existing music consumption [20][21] Pricing Strategy and Churn Management - Spotify has implemented price increases across various markets without significant changes in churn rates, indicating effective management of the value-to-price ratio [26][27] - The company emphasizes maintaining a strong value-to-price gap to minimize churn and enhance customer retention [27][29] Product Differentiation and Competitive Position - Spotify holds approximately 60% of the global streaming market share, with a focus on innovation and engagement to maintain its competitive edge [61][62] - The company aims to attract creators to its platform, enhancing its content offerings and user experience [62][63] Technological Advancements - Spotify is leveraging AI to enhance personalization and user experience, including partnerships with OpenAI for improved data utilization [64][66][68] - The company has successfully integrated AI to reduce costs and improve product offerings, such as the AI DJ feature [65][68] Advertising Business - The advertising segment is undergoing a transition towards programmatic advertising, with expectations for significant growth by 2026 [77][78] - Despite current low single-digit growth in advertising, the company is optimistic about future performance as it shifts strategies [79] Capital Allocation and Future Outlook - Spotify has €9.1 billion in gross liquidity and plans to prioritize organic growth while considering strategic acquisitions [81][82] - The company is focused on returning value to shareholders through stock buybacks and maintaining a strong balance sheet [83][84] - The management expresses confidence in achieving substantial growth, with only 3% of the global population currently paying for Spotify, indicating significant market potential [88][89] Conclusion - Spotify's management is optimistic about future growth opportunities, profitability, and market expansion, with a strong emphasis on innovation, user engagement, and strategic capital allocation [85][86][89]

Summary of Tencent Music Entertainment Group (TME) 3Q25 Earnings Review Company Overview - **Company**: Tencent Music Entertainment Group (TME) - **Market Cap**: $32.3 billion - **Enterprise Value**: $27.2 billion - **Current Price**: $20.75 - **12-Month Price Target**: $25.20 (Upside: 21.4%) [1][2] Key Financial Highlights - **3Q25 Results**: TME reported a small beat on revenue and profit, but shares declined by approximately 8-9% during trading [2] - **Revenue Forecasts**: - 2025E Revenue: Rmb 32,697.5 million (up from Rmb 32,309.7 million) [4] - 2026E Revenue: Rmb 36,937.3 million (up from Rmb 36,367.8 million) [4] - **Net Profit Forecasts**: - 2025E Net Profit: Rmb 9,645.0 million (up from Rmb 9,645.0 million) [4] - 2026E Net Profit: Rmb 10,747.4 million (down from Rmb 11,000 million) [4] Core Insights and Arguments - **Market Concerns**: - Increased competition among music streaming platforms (e.g., Soda Music) may impact TME's subscriber growth and pricing strategy [2] - Volatility in the live performance business could weigh on group margin expansion in 2026 [2] - **Growth Narrative**: Despite concerns, TME's growth narrative remains intact due to its unique content and value-added services for over 500 million monthly active users (MAUs) [2] - **Revenue Diversification**: TME is expected to achieve solid Average Revenue Per User (ARPU) growth through SVIP penetration and additional service offerings, alongside expansion into live entertainment and fan economy businesses [2] Future Projections - **2026E Expectations**: - Group revenue growth of 16%+ [3] - Online music revenue growth of 17% year-over-year [17] - Gross Profit (GP) of Rmb 16.2 billion with a Gross Profit Margin (GPM) of 43.9% [17] - Non-GAAP Net Profit (NP) of Rmb 10.7 billion with a Net Profit Margin (NPM) of 29.1% [17] Risks and Challenges - **Key Risks**: - Potential derailment from the beat-and-raise cycle [18] - Higher-than-expected content pricing from label companies [18] - Inability to maintain market dominance amid increasing competition [18] - Slower-than-expected growth in non-subscription online music services [18] - Decline in social entertainment business [18] Additional Insights - **ARPU Forecast**: Expected to reach Rmb 19.4 for SVIP and Rmb 10.7 for basic members by 2025E [28] - **Subscriber Growth**: Anticipated growth in quarterly net additions of music subscribers, albeit at a slower pace [30] - **SVIP Membership**: Expected to reach 25.9 million by 2027E, with penetration increasing from 13% to 19% of total paying members [32] Conclusion - TME is positioned to leverage its unique offerings and user base to drive future growth, despite facing competitive pressures and market volatility. The company maintains a "Buy" rating with a revised price target reflecting its growth potential and market leadership in the music streaming industry [3][4]

Market Landscape Evolution - The Chinese online music streaming market has shifted from a "duopoly" dominated by Tencent Music and NetEase Cloud Music to a "tripartite" competition with the entry of ByteDance's Soda Music [2][3] - Tencent Music held a market share of 76.1% in 2016-2017, while NetEase Cloud Music had about 15.6%. This dominance continued until the emergence of Soda Music [2][3] - As of Q1 2024, Tencent Music and NetEase Cloud Music maintained a combined market share of over 90%, with Tencent Music's monthly active users (MAU) at approximately 202 million and NetEase Cloud Music at around 185 million [2][3] Business Model Comparison - The overall payment rate for online music in China has increased from less than 5% five years ago to about 15% by the end of 2023, indicating a growing trend in user willingness to pay [5] - Tencent Music reported a decline in monthly active users to 551 million, down 4.3% year-on-year, but an increase in paid users to 12.57 million, reflecting a 5.6% growth [6][7] - NetEase Cloud Music's subscription revenue grew by 15.2% year-on-year, reaching 2.47 billion yuan in the first half of 2025, with a paid user conversion rate of 27% [7][9] Platform Strategies - Tencent Music leverages its extensive entertainment ecosystem, focusing on IP creation and social engagement, while NetEase Cloud Music emphasizes community and original content [13][14] - Soda Music employs an algorithm-driven model similar to Spotify, focusing on user acquisition through free offerings and a seamless integration with Douyin (TikTok) for content discovery [15][26] Copyright Disputes - The end of the exclusive copyright era in 2021 allowed for a more open competition among platforms, reducing the need for high-cost exclusive agreements [20][21] - The transition to a post-exclusive era has led to a more level playing field, with platforms focusing on user experience and operational efficiency rather than solely on acquiring exclusive rights [25][22] Future Outlook - The market may stabilize into a "three-way competition" with Tencent Music, NetEase Cloud Music, and Soda Music each solidifying their respective niches [33] - The potential for a "fourth player" to emerge in the market appears low, given the historical challenges faced by new entrants and the dominance of existing players [34]

Core Insights - Spotify is set to introduce music videos in the U.S. after a successful beta rollout in 98 markets, positioning itself as a competitor to YouTube in the audiovisual space [1] - A new partnership with the National Music Publishers' Association (NMPA) will allow independent music publishers to enter direct license agreements for expanded audiovisual rights, leading to higher royalty payouts for songwriters [2][3] Group 1: Spotify's New Features - The introduction of music videos will be available for premium subscribers in the U.S. in the coming weeks [1] - This move aims to enhance the connection between artists and fans through new video features [2] Group 2: Partnership with NMPA - The NMPA has launched an "Opt-In Portal" for its members to facilitate direct licensing agreements with Spotify, which will be open for eligible publishers from November 11 to December 19 [3] - The partnership is expected to create new revenue streams for independent publishers and songwriters, reflecting the increasing value of songs in the digital landscape [2][3]

Market Overview - Pre-market futures are up, indicating a positive market sentiment following a mixed session where the Dow reached a record high while the Nasdaq and S&P 500 experienced pullbacks [1] - Current index performance shows the Dow up +103 points, S&P 500 up +22, Nasdaq up +151, and Russell 2000 up +7 points [1] Economic Indicators - The government shutdown is ongoing, now on Day 43, with a House vote scheduled to discuss re-opening [2] - Upcoming economic reports such as CPI, PPI, Weekly Jobless Claims, and Retail Sales are still possible, which could provide insights into the economy ahead of the holiday shopping season [2] Inflation Insights - Year-over-year Consumer Price Inflation is currently at +3%, up from +2.3% in April, with expectations to reach +3.1% for October [3] - This increase in inflation is significant for the Federal Reserve's considerations regarding future interest-rate cuts [4] Company Earnings Reports - Tencent Music Entertainment Group (TME) reported Q3 earnings of 22 cents per share, beating expectations, with revenues of $1.19 billion, a +20.6% year-over-year increase; however, the stock is down -2% [5] - On Holding (ONON) exceeded earnings expectations with 50 cents per share versus the anticipated 34 cents, and revenues of $992.9 million, leading to a +23% increase in shares [6] - McGraw-Hill (MH) reported an earnings surprise of +300%, with earnings of $1.40 per share compared to the expected $0.35, and revenues of $669.2 million, resulting in a +14% increase in shares [7]

Financial Data and Key Metrics Changes - In Q3 2025, total revenues grew 21% year-on-year to RMB 8.5 billion, marking the highest revenue growth since Q1 2021 [21] - Online music revenues increased by 27% year-on-year to RMB 7 billion [21] - Music subscription revenues surged 70% year-on-year to RMB 4.5 billion, driven by growth in monthly ARPPU and subscriber base [22] - Monthly ARPPU reached RMB 11.9, up from RMB 10.8 in the same period last year [22] - Net profit increased by 29% to RMB 2.2 billion, with non-IFRS net profit rising by 28% to RMB 2.5 billion [25] Business Line Data and Key Metrics Changes - The subscription business saw significant growth, with SVIP membership driving higher ARPPU and user engagement [22][24] - Advertising revenue continued to grow, supported by diversified product offerings and innovative ad formats [23] - Offline performances and artist-related merchandise sales experienced triple-digit year-on-year revenue growth [23] Market Data and Key Metrics Changes - The company successfully hosted multiple large-scale international concerts, including a tour for G-Dragon, attracting over 150,000 attendees [7][8] - The TMEA Concerts featured 35 artists and drew more than 10,000 attendees, highlighting the company's strong market presence [8] Company Strategy and Development Direction - The company aims to broaden its music service and unlock new growth opportunities through innovations in content, services, and live experiences [4] - A dual-engine strategy focusing on platform and content integration is emphasized to enhance user experience and drive growth [57] - The company plans to continue leveraging partnerships with artists and IP creators to enrich its content offerings [10][55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong results in Q4 2025 and 2026, driven by a holistic growth strategy and robust user engagement [30][32] - The competitive landscape remains challenging, but the company believes its extensive music library and user management will maintain its leadership position [41][42] - Future growth is expected to come from both subscription and non-subscription services, with a focus on enhancing user experience and content quality [32][75] Other Important Information - The company has won the Music Garden Space Public Welfare Program for seven consecutive years, supporting music education in rural areas [11] - As of September 13, 2025, cash equivalents and short-term investments totaled RMB 36.1 billion, reflecting a solid financial position [26] Q&A Session Summary Question: Outlook for Q4 2025 and 2026 - Management is optimistic about continued growth in music subscriptions and non-subscription services, with a focus on user retention and engagement [30] Question: Industry competition and strategy - Management acknowledged competition from peers but emphasized the company's strong content library and user experience as competitive advantages [41][42] Question: 2026 concert pipeline and revenue modeling - The company plans to organize more top artist tours and leverage proprietary IP to enhance concert experiences and revenue [66] Question: Subscription service growth drivers - Future growth will focus on high-quality content, functional privileges, and a multi-pronged membership strategy to drive user acquisition [75]

Financial Data and Key Metrics Changes - In Q3 2025, total revenues grew 21% year-on-year to CNY 8.5 billion, marking the highest revenue growth since Q1 2021 [17] - Online music revenues increased by 27% year-on-year to CNY 7 billion [18] - Music subscription revenues surged 70% year-on-year to CNY 4.5 billion, driven by growth in monthly ARPPU and subscriber base [18] - Monthly ARPPU reached CNY 11.9, up from CNY 10.8 in the same period last year [18] - Net profit increased by 29% to CNY 2.2 billion, with non-IFRS net profit rising by 28% to CNY 2.5 billion [22] Business Line Data and Key Metrics Changes - Offline performances and artist-related merchandise sales experienced triple-digit year-on-year revenue growth [19] - Advertising revenue continued to grow, driven by a diversified product portfolio and innovative ad formats [19] - Social entertainment services and other revenues were CNY 1.5 billion, down by 3% year-on-year [20] Market Data and Key Metrics Changes - The company successfully hosted multiple concerts both domestically and internationally, including a concert tour for G-Dragon that drew over 150,000 attendees [5][6] - The annual flagship TMEA Concerts featured 35 artists and attracted more than 10,000 attendees [6] Company Strategy and Development Direction - The company aims to leverage its dual-engine strategy of platform and content to enhance user experience and drive growth [10][33] - Continued focus on expanding the music service and unlocking new growth opportunities through artist partnerships and innovative offerings [3][8] - The company is committed to enhancing its music ecosystem and exploring new opportunities in offline performances and artist-related merchandise [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in delivering strong results for Q4 2025 and 2026, with expectations of sustained healthy growth in music subscription and non-subscription businesses [25][27] - The competitive landscape remains challenging, but the company believes its extensive music library and user experience will maintain its leadership position [29][30] Other Important Information - The company has won the Music Garden Space Public Welfare Program for seven consecutive years, supporting music education in rural areas [9] - The company is exploring new product combinations and service formats to enhance the fan-based economy [26] Q&A Session Summary Question: What is the outlook for Q4 2025 and 2026? - Management is optimistic about strong performance in both online music services and overall revenue growth for 2025, with a focus on subscription and non-subscription business growth [25][27] Question: How does management view the competitive landscape in the music streaming business? - Management acknowledges competition from peers but believes in their competitive edge through content differentiation and user experience [28][29] Question: What are the growth drivers for subscription services in 2026? - Growth will be driven by high-quality content, content privileges, and functional enhancements, with a focus on maintaining steady growth in subscriber base and ARPPU [39][41]

Core Viewpoint - Tencent Music's financial performance shows significant growth, with total revenue increasing by 20.6% year-on-year to 8.46 billion yuan, and adjusted net profit rising by 27.7% to 2.48 billion yuan, driven by its "one body, two wings" strategy in online music services [3] Group 1: Financial Performance - Total revenue for Tencent Music reached 8.46 billion yuan, reflecting a year-on-year growth of 20.6% [3] - Adjusted net profit increased by 27.7% to 2.48 billion yuan [3] - Online music service revenue was 6.97 billion yuan, up 27.2% year-on-year [3] - Online music subscription revenue reached 4.5 billion yuan, growing by 17.2% [3] - The number of paid online music users reached 125.7 million, with ARPPU rising to 11.9 yuan [3] Group 2: Strategic Developments - Tencent Music continues to deepen its "one body, two wings" strategy, enhancing its content ecosystem and expanding international business [3] - The company is focused on upgrading platform features and offering personalized membership services to meet diverse user needs [3] - There is a steady increase in super member penetration and ARPPU, contributing to overall performance growth [3] Group 3: Market Outlook - Analysts from multiple firms, including Morgan Stanley and CICC, express positive long-term expectations for Tencent Music, with ratings of "overweight" and "buy" [4] - Morgan Stanley highlights Tencent Music's clearer strategic layout and the growth potential of concert-related businesses as new revenue drivers [4] - CICC anticipates further growth in super member scale and ARPPU, supporting its "outperform" rating [4]

Core Insights - Tencent Music Entertainment Group reported its unaudited financial performance for the third quarter ending September 30, 2025, showing a total revenue of 8.46 billion yuan, a year-on-year increase of 20.6%, and an adjusted net profit of 2.48 billion yuan, up 27.7% [1] Revenue Breakdown - The online music business continues to drive growth, with online music service revenue increasing by 27.2% year-on-year to 6.97 billion yuan [1] - The average revenue per paid user per month rose from 10.8 yuan in the same period of 2024 to 11.9 yuan [1] Strategic Initiatives - The company achieved robust growth through the deepening of its "content and platform" dual strategy [1] - Tencent Music has strengthened collaborations with globally renowned record companies and artists, hosting large domestic and international tours and expanding its own performance IP matrix [1] - Continuous innovation in product features and services has been implemented to meet the diverse needs of user groups, creating personalized and differentiated music experiences [1]

Core Insights - Spotify and the National Music Publishers' Association (NMPA) are collaborating to create a new revenue stream for music creators through a direct licensing agreement for expanded audiovisual rights [2][3] - The partnership aims to increase royalty payouts for independent music publishers and songwriters while allowing Spotify to enhance its video features to better connect artists and fans [3][4] Group 1: Partnership Details - The NMPA's opt-in portal will be available to over 2,800 members starting November 11, 2025, with onboarding continuing until December 19, 2025 [4] - This initiative is expected to provide indie publishers the opportunity to enter direct deals with Spotify regarding audiovisual streaming functionality [4] Group 2: Industry Context - The partnership occurs amidst ongoing tensions between the NMPA and Spotify, particularly regarding publisher royalty rates and bundling practices, which are projected to result in over $3.1 billion in losses for music publishers by 2032 [5][6] - As of Q3 2025, Spotify reported 281 million premium subscribers and over 713 million monthly active users globally [5]