Spotify Technology S.A. (NYSE:SPOT) today reported financial
results for the fourth fiscal quarter of 2019 ending December 31,
2019.
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the full release here:
https://www.businesswire.com/news/home/20200205005323/en/
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Dear Shareholders,
The business continued to perform well in 4Q19. For the third
consecutive quarter, total MAU growth accelerated while
Subscribers, Revenue, and Gross Margin all met or exceeded our
expectations. We continue to see exponential growth in podcast
hours streamed (up approximately 200% Y/Y) and are now seeing clear
indications that podcast usage is driving increased overall
engagement and retention. We have seen early indications that our
investments in podcasts are having a positive impact on conversion
of free to paid users. Overall, the business performance remains
strong, and we believe we are well positioned for growth in the
coming year.
2020 OUTLOOK
With three consecutive quarters of accelerating MAU growth and
another year of record net subscriber additions behind us, we are
enthusiastic about the underlying trends in the business. From
history, we know that MAU growth tends to be a leading indicator of
future subscriber additions, which is then followed by revenue
gains in both premium and ad-supported users. While we believe
these trends will continue moving forward, we have been
appropriately conservative regarding our 2020 guidance as our data,
particularly around the benefits from podcasts, is still reasonably
new.
On the cost side, we have been consistent in our messaging. Any
decision to accelerate our investment in podcast and technology
spend should be viewed as an indication of our belief that our
strategy is having tangible results. We have gained even more
confidence in the data, particularly around the benefits from
podcasts, and as a result, 2020 will be an investment year.
MONTHLY ACTIVE USERS (“MAUs”)
Total MAUs grew 31% Y/Y to 271 million, outperforming the high
end of our guidance.
For the third straight quarter, we have outperformed the high
end of our MAU guidance range as top-of-funnel growth continues to
accelerate. Growth re-accelerated across our 3 largest regions
(Europe, North America, and Latin America), while the Rest of World
segment remains our fastest growing. Of note, North America saw the
fastest quarterly growth since 4Q’18. Seeing a re-acceleration in
user growth, at our scale, is a strong signal to us of the health
of our business. We know, from history, that strong MAU trends are
a harbinger of future subscriber and financial growth.
In previous quarters, we’ve spoken about continued innovation in
the product experience. Some of these improvements yield immediate
results, while others can take quarters to materialize into
tangible benefits. With that in mind, in the last few quarters we
have seen steady improvements in retention, in some cases
significantly. Importantly, each of our top 20 markets has seen
improvement in retention year on year. While further improvements
are not explicitly assumed in our future expectations (2020
guidance below), our belief is that continued enhancements to the
product and further growth in podcasts will lead to even better
retention, higher conversion, and ultimately, higher lifetime
value. We are seeing this thesis play out in our results to date,
and you should expect us to continue to invest in product and
innovation if these trends persist.
Results in Q4 were bolstered by our promotional activity. On
December 5, 2019, we launched the 5th annual year-end Spotify
Wrapped campaign. The campaign ran through the end of the month and
was enhanced in several key ways this year. Importantly, we
delivered the consumer experience via the native mobile app (in
addition to a website hosted on Spotify.com) for the first time,
expanded the reach of the campaign to 21 markets globally,
highlighted insights from the past decade (in addition to the
year), and provided a personalized Wrapped experience to all
Spotify creators (inclusive of podcasters). More than 60 million
users engaged with Wrapped content this year, spurring more than 40
million shares of Wrapped stories and cards and more than 6.5
billion streams from Year/Decade Top Songs playlists.
PREMIUM SUBSCRIBERS
We ended the year with 124 million Premium Subscribers globally,
up 29% Y/Y and ahead of forecast. This was the highest net add
quarter we’ve ever experienced, and the fastest we’ve ever added 10
million subscribers. During Q4 we expanded our ‘3 months on us’
offer to new Family Plan subscribers, in addition to previous
offers for Individual and Student.
Q4 saw the continuation of our Google Home partnership whereby
new and existing subscribers to our Individual, Student, and Family
Plans in the US could claim a free Google Home Mini. To date, this
partnership has driven a meaningful amount of incremental
subscribers. In addition to Google, we also launched two new
partnerships and renewed one existing partnership during Q4: the
UK’s largest electronics retailer Curry’s PC World, Microsoft’s
gaming subscription XBOX Game Pass in the US and UK, and a renewal
with one of France’s largest telco operators, Bouygues. Each deal
features a 6-month free trial to Spotify Premium for eligible
participants.
Once again, we ran our annual year-end promotional Holiday
Campaign. This year’s marketing campaign focused on our ‘3 months
on us’ intro offer for new users, as well as a win-back offer for
returning customers. We finished the year strong, boosted by strong
Free MAU growth, the success of the Wrapped campaign, and higher
than expected seasonality lift over the holiday period.
Churn improved more than 80 bps Y/Y and more than 50 bps
sequentially. However, it’s worth noting that the change in our
promotional strategy had a positive impact.
FINANCIAL METRICS
Revenue
Total revenue of €1,855 million grew 24% Y/Y in Q4. Consolidated
revenue was in line with our expectations with Premium slightly
better and Ad-Supported slightly weaker than forecast. Premium
revenue was €1,638 million, up 24% Y/Y, while Ad-Supported revenue
was €217 million, up 23% Y/Y.
For the Premium business, average revenue per user (“ARPU”) of
€4.65 in Q4 was down 5% Y/Y (down 6% excluding the impact from FX
rates). A significant portion of this decline was driven by the
extension of the free trial period across our entire product suite
in the quarter. Excluding the impact of Trials & Campaigns,
ARPU would have declined 2% Y/Y as a result of continued mix shifts
in product and geography.
Ad-Supported revenue growth of 23% Y/Y was an acceleration from
Q3, but still fell slightly short of expectations. We had a slower
start than usual in Q4, particularly in our Direct business,
following some of the technical issues we had implementing a new
order management system last quarter. By December, momentum in
bookings had returned to normal levels but wasn’t enough to
compensate for the slower start to the quarter. With that said, we
still saw double digit rates of growth across each of our Direct,
Programmatic, and Ad Studio channels. During Q4 we introduced
Dynamic Ad Breaks (“DAB”) in the US and UK which added significant
sellable inventory. We plan to expand this capability into 10 more
markets in Q1 and will continue to scale these capabilities as
content becomes increasingly available over our total geographic
footprint.
Gross Margin
Gross Margin was 25.6% in Q4, toward the high end of our
guidance range. The largest driver of outperformance stemmed from
slight improvement in the non-royalty component of Gross Margin,
including payment fees, streaming delivery costs, and other
miscellaneous variances. Royalty costs were in line with our
expectations. Q4 2019 Gross Margin compares with a 26.7% Gross
Margin in 2018. As a reminder, our Q4 2018 Gross Margin included a
number of one-time benefits. Excluding those non-recurring items,
the Gross Margin in Q4 2018 would have been 25.8%
Premium Gross Margin was 26.9% in Q4, up from 26.5% in Q3, but
down 40 bps Y/Y. Ad-Supported Gross Margin was 15.4% in Q4, down
from 16.0% in Q3 and down 670 bps Y/Y.
Operating Expenses / Income (Loss)
Operating expenses of €551 million in Q4 increased 80% Y/Y,
largely driven by higher than expected social charges resulting
from an increase in our share price. Excluding the higher than
planned social charges, Operating Loss would have finished slightly
better than forecast as a result of the slight outperformance in
Gross Profit.
As a reminder, social charges are payroll taxes associated with
stock based compensation. We are subject to social taxes in several
countries in which we operate, although Sweden accounts for the
bulk of the social costs. We don’t forecast stock price changes in
our guidance so upward or downward movements will impact our
reported operating expenses. In Q4, the increase in our share price
resulted in social charges that were more than €20 million higher
than planned.
Podcasts
We continue to see exponential growth in podcast consumption.
More than 16% of our Total MAUs now engage with Podcast content,
and consumption hours in Q4 have grown nearly 200% Y/Y.
Today, we now have more than 700,000 podcast titles available on
the platform. We added personalized elements to the podcast
experience in Q4 with the launch of Your Daily Podcasts in several
of our priority podcast markets including the US, UK, Germany,
Sweden, Mexico, Brazil, Canada, Australia, and New Zealand. During
Q4, we also released 26 shows in markets outside of the US to
capitalize on the growing global trend of consumption. These
included, but were not limited to, Hypnosis
Radio in Japan, Fausto in
Mexico (which quickly became the #1 podcast in the country), an
adaptation of Parcast title Cults for German audiences called
SEKTEN & KULTE, and our first
three original podcasts in India: 22
Yarns, Love Aaj Kal, and
Bhaskar Bose. We also held the
first-ever Spotify for Podcasters summit in Brazil, a 2-day event
in Sao Paulo where we welcomed more than 1,000 creators with 32
panels and 11 workshops. After previewing with the US audience, we
also expanded the Your Daily Drive concept to encompass users in
Germany and Sweden in Q4.
As we mentioned last quarter, we have a growing body of evidence
showing that there are significant benefits to engagement,
retention, and conversion of users from Ad-Supported to Premium
stemming from consumption of Podcast content. We have seen benefits
to retention on the order of several hundred basis points, which is
a material change on a retention curve, for users that engage with
spoken word content relative to those that haven’t, and early data
indicates that these users are more likely to convert to Premium
over time. However, there is still work to be done to model the
future impact we expect podcasts to have on our metrics, and while
we firmly believe these benefits will begin to flow through the
model over time, we have been cautious with respect to including
the impact of these efforts to our 2020 guidance. Expect us to
update our views on this front as we gather and process more data
over the course of the year, but we have been extremely pleased
with the underlying trends.
Two-Sided Marketplace
Our two-sided marketplace strategy means we’re not just serving
listeners; we’re also building tools and services for the creator
community — everyone from artists and songwriters to publishers and
labels to podcasters and storytellers.
The goal of our creator-facing marketplace strategy is to
harness Spotify’s ability to drive discovery to connect artists
with fans on a scale that has never before existed with the goal of
enabling 1 million artists to live off of their work. Specifically,
Marketplace is about meeting the needs of creator teams to create
art, engage with, grow, and better monetize their fanbase.
These initiatives drive a combination of revenue through selling
paid marketplace tools to creators and their teams, as well as
content cost savings through negotiating more favorable licensing
rates with certain segments of content suppliers. For the full year
2019 paid marketplace tools combined with strategic licensing
contributed more than €30 million in Gross Profit. As adoption
picks up among more of our partners, we expect the growth rate to
increase and become a meaningful source of Gross Profit over the
next few years. For 2020, we expect growth in Marketplace
contribution to be in excess of 50%.
Recent highlights of positive developments with our marketplace
strategy include:
- Spotify for Artists: Launched the year-end “Artist
Wrapped” campaign to drive engagement among existing Spotify for
Artists users and acquire new ones. Artist Wrapped is the industry
version of our consumer 2019 Wrapped campaign. It is a tailor-made
experience for artist teams that summarizes the highlights of their
year on Spotify and how listeners engaged with their work. There
are now over 500,000 monthly active artists and creators on Spotify
for Artists, and we expect the platform to be the main entry point
for most of our paid creator tools.
- Sponsored Recommendations: As discussed in previous
earnings calls, we see native content promotion as an area of high
value to both artists and listeners and also as a new higher margin
revenue stream for Spotify. Our sponsored new release
recommendation is targeted to both Ad-Supported and Premium
listeners on mobile and is a personalized reminder for users to
stream an album that we believe they’ll like. For labels and
artists, this tool is an opportunity to reach the right audience at
the right time in ways they can’t with other platforms. In October
2019, we launched the Beta in the United States. Our primary goal
with the Beta in Q4 was learning, keeping a close eye on listener
and customer feedback to evaluate product-market fit. Average
click-through rates and average listener conversion have been at
consistently high rates (+30% for each). Additionally, sponsored
recommendations have had no noticeable effect on our Premium
retention, with feedback suggesting users find the content relevant
and valuable. Early indications on the artist side are also very
encouraging. Not only can sponsored recommendations have a
significant impact on awareness, but this tool is proving to be
very effective in ensuring an artist seamlessly finds its audience.
Compared to a control group, we have seen sponsored recommendations
drive a material increase in both saves and plays. For example, the
independent distributor, Caroline, leveraged sponsored
recommendations for the release of their highly anticipated fourth
album from Trippie Redd, which opened at #1.
- Other - We will continue to grow and expand the
marketplace strategy, including with services such as Soundtrap
and Soundbetter. As an example, while still early days,
Soundtrap doubled its paying subscriber base in Q4. Expect more
innovation of products over the coming years.
Lease Accounting
Starting January 1, 2019, we adopted the new lease accounting
standards dictated by IFRS 16. This required certain leases which
were accounted for as operating leases be treated as finance leases
going forward. Certain leases were reclassified as assets and
liabilities on the balance sheet which yielded increased
depreciation and interest expense, offset by a reduction in rental
expense. We recognized €10 million of lease liability interest
expense in finance costs during the fourth quarter of 2019.
Free Cash Flow
We generated €203 million in net cash flows from operating
activities and €169 million in Free Cash Flow in Q4. We maintain
positive working capital and expect similar dynamics in FY 2020,
excluding the impact of capital expenditures associated with the
build-out of new and existing offices and timing of certain
payments to rights holders. We paid out approximately €32 million
associated with our office builds in Q4.
In Q4, our quarterly free cash was boosted by a shift in timing
with respect to a couple of payments. With some licensors, the
timing of certain payments can be irregular. As a result, several
payments have been shifted into Q1 of 2020 and as a result, we are
expecting FCF to be negative in the first quarter of the year.
However, we do expect to deliver positive Free Cash Flow for the
year.
We ended Q4 with €1.8 billion in cash and cash equivalents,
restricted cash, and short term investments.
Q1 2020 OUTLOOK
These forward-looking statements reflect Spotify’s expectations
as of February 5, 2020 and are subject to substantial
uncertainty.
Q1 2020 Guidance:
- Total MAUs: 279-289 million
- Total Premium Subscribers: 126-131 million
- Total Revenue: €1.71-€1.91 billion
- Gross Margin: 23.5-25.5%
- Operating Profit/Loss: €(65)-€(115) million
Full Year 2020 Guidance:
- Total MAUs: 328-348 million
- Total Premium Subscribers: 143-153 million
- Total Revenue: €8.08-€8.48 billion
- Gross Margin: 23.2-25.2%
- Operating Profit/Loss: €(150)-€(250) million
EARNINGS QUESTION & ANSWER SESSION
The Company will host a live question and answer session
starting at 8 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 to ir@spotify.com and via the live chat window
available through the webcast. Participants also may join using the
listen-only conference line:
Participant Toll Free Dial-In Number: (844) 343-9039
Participant International Dial-In Number: (647)
689-5130
Conference ID: 1654959
Use of Non-IFRS Measures
To supplement our interim condensed consolidated financial
statements, which are prepared and presented in accordance with
IFRS, we use the following non-IFRS financial measures: Revenue
excluding foreign exchange effect, Premium revenue excluding
foreign exchange effect, Ad-Supported revenue excluding foreign
exchange effect, EBITDA, and Free Cash Flow. Management believes
that Revenue excluding foreign exchange effect, Premium revenue
excluding foreign exchange effect and Ad-Supported revenue
excluding foreign exchange effect are important metrics because
they present measures that facilitate comparison to our historical
performance. However, Revenue excluding foreign exchange effect,
Premium revenue excluding foreign exchange effect and Ad-Supported
revenue excluding foreign exchange effect should be considered in
addition to, not as a substitute for or superior to, Revenue,
Premium revenue, Ad-Supported revenue or other financial measures
prepared in accordance with IFRS. Management believes that EBITDA
and Free Cash Flow are important metrics because they present
measures that approximate 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, these measures should be
considered in addition to, not as a substitute for or superior to,
net income, operating income, or other financial measures prepared
in accordance with IFRS. For more information on these non-IFRS
financial measures, please see “Reconciliation of IFRS to Non-IFRS
Results” table.
Forward Looking Statements
This shareholder letter 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 and to retain existing users; competition
for users and user listening time; our dependence upon third-party
licenses for most of the content we stream; our lack of control
over the providers of our content and their effect on our access to
music and other content; our ability to comply with the many
complex license agreements to which we are a party; our ability to
accurately estimate the amounts payable under our license
agreements; the limitations on our operating flexibility due to the
minimum guarantees required under certain of our license
agreements; our ability to obtain accurate and comprehensive
information about music compositions in order to obtain necessary
licenses or perform obligations under our existing license
agreements; new copyright legislation that may increase the cost
and/or difficulty of music licensing; risks associated with our
international expansion, including difficulties obtaining rights to
stream content on favorable terms; our ability to generate
sufficient revenue to be profitable or to generate positive cash
flow on a sustained basis; our ability to expand our operations to
deliver content beyond music, including podcasts; potential
breaches of our security systems; assertions by third parties of
infringement or other violations by us of their intellectual
property rights; our ability to accurately estimate our user
metrics and other estimates; risks associated with manipulation of
stream counts and user accounts and unauthorized access to our
services; changes in legislation or governmental regulations
affecting us; risks relating to privacy and protection of user
data; our ability to maintain, protect, and enhance our brand;
ability to hire and retain key personnel; risks relating to the
acquisition, investment, and disposition of companies or
technologies; tax-related risks; the concentration of voting power
among our founders who have and will continue to have substantial
control over our business; risks related to our status as a foreign
private issuer; international, national or local economic, social
or political conditions; and risks associated with accounting
estimates, currency fluctuations and foreign exchange controls. 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 12,
2019. We undertake no obligation to update forward-looking
statements to reflect events or circumstances occurring after the
date of this shareholder letter.)
Interim condensed consolidated
statement of operations (Unaudited) (in € millions, except
share and per share data
Three months ended
Year ended
December 31,
2019
September 30,
2019
December 31,
2018
December 31,
2019
December 31,
2018
Revenue
1,855
1,731
1,495
6,764
5,259
Cost of revenue
1,381
1,290
1,096
5,042
3,906
Gross profit
474
441
399
1,722
1,353
Research and development
173
136
100
615
493
Sales and marketing
276
178
163
826
620
General and administrative
102
73
42
354
283
551
387
305
1,795
1,396
Operating (loss)/income
(77
)
54
94
(73
)
(43
)
Finance income
7
226
389
275
455
Finance costs
(103
)
(10
)
(2
)
(333
)
(584
)
Share in losses of associate
—
—
—
—
(1
)
Finance income/(costs) - net
(96
)
216
387
(58
)
(130
)
(Loss)/income before tax
(173
)
270
481
(131
)
(173
)
Income tax expense/(benefit)
36
29
39
55
(95
)
Net (loss)/income attributable to
owners of the parent
(209
)
241
442
(186
)
(78
)
(Loss)/earnings per share attributable
to owners
of the parent
Basic
(1.14
)
1.34
2.44
(1.03
)
(0.44
)
Diluted
(1.14
)
0.36
0.36
(1.03
)
(0.51
)
Weighted-average ordinary shares
outstanding
Basic
182,942,528
179,863,596
181,067,994
180,960,579
177,154,405
Diluted
182,942,528
188,477,554
190,511,148
180,960,579
181,210,292
Condensed consolidated statement of
financial position (Unaudited) (in € millions)
December 31,
2019
December 31,
2018
Assets
Non-current assets
Lease right-of-use assets
489
—
Property and equipment
291
197
Goodwill
478
146
Intangible assets
58
28
Long term investments
1,497
1,646
Restricted cash and other non-current
assets
69
65
Deferred tax assets
9
8
2,891
2,090
Current assets
Trade and other receivables
402
400
Income tax receivable
4
2
Short term investments
692
915
Cash and cash equivalents
1,065
891
Other current assets
68
38
2,231
2,246
Total assets
5,122
4,336
Equity and liabilities
Equity
Share capital
—
—
Other paid in capital
4,192
3,801
Treasury shares
(370
)
(77
)
Other reserves
924
875
Accumulated deficit
(2,709
)
(2,505
)
Equity attributable to owners of the
parent
2,037
2,094
Non-current liabilities
Lease liabilities
622
—
Accrued expenses and other liabilities
20
85
Provisions
2
6
Deferred tax liabilities
2
2
646
93
Current liabilities
Trade and other payables
549
427
Income tax payable
9
7
Deferred revenue
319
258
Accrued expenses and other liabilities
1,438
1,076
Provisions
13
42
Derivative liabilities
111
339
2,439
2,149
Total liabilities
3,085
2,242
Total equity and liabilities
5,122
4,336
Interim condensed consolidated
statement of cash flows (Unaudited) (in € millions)
Three months ended
Year ended
December 31,
2019
September 30,
2019
December 31,
2018
December 31,
2019
December 31,
2018
Operating activities
Net (loss)/income
(209
)
241
442
(186
)
(78
)
Adjustments to reconcile net (loss)/income
to net
cash flows
Depreciation of property and equipment
and
20
17
4
71
21
lease right-of-use assets
Amortization of intangible assets
4
5
4
16
11
Share-based payments expense
28
31
23
122
88
Finance income
(7
)
(226
)
(389
)
(275
)
(455
)
Finance costs
103
10
2
333
584
Income tax expense/(benefit)
36
29
39
55
(95
)
Other
14
1
15
13
8
Changes in working capital:
(Increase)/decrease in trade
receivables
and other assets
(14
)
2
(59
)
(27
)
(61
)
Increase in trade and other
liabilities
222
2
57
454
291
Increase in deferred revenue
15
12
17
59
38
Decrease in provisions
1
(44
)
(7
)
(35
)
(17
)
Interest paid on lease liabilities
(12
)
(12
)
—
(37
)
—
Interest received
2
4
3
14
18
Income tax paid
—
(1
)
(1
)
(4
)
(9
)
Net cash flows from operating
activities
203
71
150
573
344
Investing activities
Business combinations, net of cash
acquired
—
(7
)
—
(331
)
(9
)
Purchases of property and equipment
(32
)
(26
)
(65
)
(135
)
(125
)
Purchases of short term investments
(231
)
(268
)
(300
)
(901
)
(1,069
)
Sales and maturities of short term
investments
165
245
66
1,163
1,226
Change in restricted cash
(2
)
3
(1
)
2
(10
)
Other
(5
)
(4
)
—
(16
)
(35
)
Net cash flows used in investing
activities
(105
)
(57
)
(300
)
(218
)
(22
)
Financing activities
Payments of lease liabilities
(4
)
(4
)
—
(17
)
—
Lease incentives received
—
15
—
15
—
Repurchases of ordinary shares
(30
)
(125
)
(72
)
(438
)
(72
)
Proceeds from exercise of stock
options
71
30
17
154
163
Proceeds from the issuance of warrants
—
15
—
15
—
Proceeds from the exercise of warrants
74
—
—
74
—
Other
(2
)
(4
)
—
(6
)
1
Net cash flow from/(used in) financing
activities
109
(73
)
(55
)
(203
)
92
Net increase/(decrease) in cash
and
cash equivalents
207
(59
)
(250
)
152
414
Cash and cash equivalents at beginning of
the period
877
909
1,095
891
477
Net exchange (losses)/gains on cash
and
cash equivalents
(19
)
27
1
22
--
Cash and cash equivalents at period
end
1,065
877
891
1,065
891
Calculation of basic and diluted
earnings/(loss) per share (Unaudited) (in € millions, except
share and per share data)
Three months ended
Year ended
December 31,
2019
September 30,
2019
December 31,
2018
December 31,
2019
December 31,
2018
Basic (loss)/earnings per share
Net (loss)/income attributable to owners
of the parent
(209
)
241
442
(186
)
(78
)
Share used in computation:
Weighted-average ordinary shares
outstanding
182,942,528
179,863,596
181,067,994
180,960,579
177,154,405
Basic (loss)/earnings per share
attributable
to owners of the parent
(1.14
)
1.34
2.44
(1.03
)
(0.44
)
Diluted (loss)/earnings per
share
Net (loss)/income attributable to owners
of the parent
(209
)
241
442
(186
)
(78
)
Fair value gains on dilutive warrants
—
(173
)
(373
)
—
(14
)
Net (loss)/income used in the
computation of
diluted (loss)/earnings per
share
(209
)
68
69
(186
)
(92
)
Shares used in computation:
Weighted-average ordinary shares
outstanding
182,942,528
179,863,596
181,067,994
180,960,579
177,154,405
Warrants
—
3,867,477
3,838,911
—
4,055,887
Share options
—
4,436,345
5,483,881
—
—
Restricted stock units
—
157,623
77,832
—
—
Restricted stock awards
—
50,623
42,530
—
—
Other contingently issuable shares
—
101,890
—
—
—
Diluted weighted-average ordinary
shares
182,942,528
188,477,554
190,511,148
180,960,579
181,210,292
Diluted (loss)/earnings per share
attributable
to owners of the parent
(1.14
)
0.36
0.36
(1.03
)
(0.51
)
Reconciliation of IFRS to Non-IFRS
Results (Unaudited) (in € millions, except percentages)
Three months ended
Year ended
December 31,
2019
December 31,
2018
December 31,
2019
December 31,
2018
IFRS revenue
1,855
1,495
6,764
5,259
Foreign exchange effect on 2019 revenue
using 2018 rates
(21
)
(117
)
Revenue excluding foreign exchange
effect
1,834
6,647
IFRS revenue year-over-year change %
24
%
29
%
Revenue excluding foreign exchange effect
year-over-year change %
23
%
26
%
IFRS Premium revenue
1,638
1,320
6,086
4,717
Foreign exchange effect on 2019 Premium
revenue using 2018 rates
(15
)
(90
)
Premium revenue excluding foreign exchange
effect
1,623
5,996
IFRS Premium revenue year-over-year change
%
24
%
29
%
Premium revenue excluding foreign exchange
effect year-over-year change %
23
%
27
%
IFRS Ad-Supported revenue
217
175
678
542
Foreign exchange effect on 2019
Ad-Supported revenue using 2018 rates
(6
)
(27
)
Ad-Supported revenue excluding foreign
exchange effect
211
651
IFRS Ad-Supported revenue year-over-year
change %
23
%
25
%
Ad-Supported revenue excluding foreign
exchange effect year-over-year change %
21
%
20
%
EBITDA (Unaudited) (in €
millions)
Three months ended
Year ended
December 31,
2019
September 30,
2019
December 31,
2018
December 31,
2019
December 31,
2018
Net (loss)/income attributable to owners
of the parent
(209
)
241
442
(186
)
(78
)
Finance income/(costs) - net
96
(216
)
(387
)
58
130
Income tax expense/(benefit)
36
29
39
55
(95
)
Depreciation and amortization
24
22
8
87
32
EBITDA
(53
)
76
102
14
(11
)
Free Cash Flow (Unaudited) (in €
millions)
Three months ended
Year ended
December 31,
2019
September 30,
2019
December 31,
2018
December 31,
2019
December 31,
2018
Net cash flows from operating
activities
203
71
150
573
344
Capital expenditures
(32
)
(26
)
(65
)
(135
)
(125
)
Change in restricted cash
(2
)
3
(1
)
2
(10
)
Free Cash Flow
169
48
84
440
209
1Free Cash Flow is a non-IFRS measure. See “Use of Non-IFRS
Measures” and “Reconciliation of IFRS to Non-IFRS Results” for
additional information.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200205005323/en/
Investor Relations: Michael Urciuoli ir@spotify.com
Public Relations: Dustee Jenkins press@spotify.com
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