Spotify Technology S.A. (NYSE:SPOT) today reported financial
results for the third fiscal quarter of 2019 ending September 30,
2019.
This press release features multimedia. View
the full release here:
https://www.businesswire.com/news/home/20191028005331/en/
Summary User and Financial Metrics
(Photo: Business Wire)
Dear Shareholders,
The business met or exceeded our expectations in 3Q19, with
accelerating MAU growth, and better than expected (1) Subscriber
growth, (2) Gross Margins, and (3) Operating Profit. For the 8th
consecutive quarter, free cash flow was positive. We continue to
see exponential growth in podcast hours streamed (up approximately
39% Q/Q) and early indications that podcast engagement is driving a
virtuous cycle of increased overall engagement and significantly
increased conversion of free to paid users. The correlations in our
data sets are clearly apparent. We are working to prove causality.
Overall, the business is performing strongly.
CFO TRANSITION
After playing a pivotal role in Spotify’s listing and helping to
establish Spotify as a public company, Barry McCarthy will retire
from Spotify on January 15, 2020, stepping down as the company’s
CFO. Barry will be replaced by Paul Vogel, who is currently
Spotify’s VP of FP&A, Treasury and Investor Relations. Paul and
Barry have worked together closely for the last 3 years. Pending
shareholder approval, it is expected that Barry will be
re-appointed to the Spotify Board of Directors, a role he held
prior to joining the company as CFO.
MONTHLY ACTIVE USERS (“MAUs”)
Total MAUs grew 30% Y/Y to 248 million, outperforming the high
end of our guidance.
Developing regions continue to be a significant driver of this
outperformance. Growth in Latin America accelerated sequentially
for the 2nd consecutive quarter as retention among newer users
continues to improve. Southeast Asia remains our fastest growing
region (excluding India), and Y/Y growth in Q3 accelerated 1400 bps
vs. 3Q18. Of note, India outperformed our forecast by 30% this
quarter. This momentum was driven by a number of factors including
the launch of our first broad-based marketing campaign,
“Sunte Ja” (“Listen On”), since launch
in February.
As we discussed last quarter, a portion of the faster MAU growth
is a result of our continued product innovation driving
improvements in long-term retention. We rolled out a number of
tests in Q3 with the goal of immersing new users in the product
functionality faster. It’s still early, but we are encouraged by
the improvements we’ve seen in retention to date. Our belief is
that a better onboarding experience leads to increased engagement,
which leads to better retention, conversion, satisfaction, and
ultimately, lifetime value. Expect us to continue to innovate like
this in the future.
PREMIUM SUBSCRIBERS
We finished Q3 with 113 million Premium Subscribers globally, up
31% Y/Y. Net Subscriber growth exceeded our expectations and was
led by strong performance in both Family Plan and Student Plan. All
other product offerings were mostly in line with expectations.
Within Family Plan we launched a slate of product upgrades, the
first meaningful changes in some time. Subscribers now have access
to new features designed specifically for families including
parental controls to filter explicit content, a Family Mix playlist
with personalized songs for the whole family, and a family hub
where master account holders can easily manage all settings in one
place.
Early September saw the expansion
of our Duo pilot from the original 5 pilot markets into an
additional 14 markets including most of Latin America.
Additionally, we kicked off our annual “back-to-school” promotion
of the Student Plan, a campaign that ran across 17 markets
including the U.S. and parts of Europe. Finally, we announced a
U.S. partnership with AT&T, which offers Spotify Premium as an
add-on to select wireless plans, and offers a 6-month free trial to
certain eligible bundle subscribers
In August, we launched a test of a
new 90-day free trial offering to Standard and Student Plans.
Family Plan was added in October. The test performed in line with
plan and was not the reason Subscribers outperformed guidance in
the quarter. We believe the 90-day offering will have positive
benefit to growth and retention moving forward.
Churn improved 19 bps Y/Y and 7 bps sequentially.
Competition
We continue to feel very good about our competitive position in
the market. Relative to Apple, the publicly available data shows
that we are adding roughly twice as many subscribers per month as
they are. Additionally, we believe that our monthly engagement is
roughly 2x as high and our churn is at half the rate. Elsewhere,
our estimates imply that we continue to add more users on an
absolute basis than Amazon. Our data also suggests that Amazon’s
user base skews significantly more to ‘Ad-Supported’ than
‘Premium’, and that average engagement on our platform is
approximately 3x.
FINANCIAL METRICS
Revenue
Total revenue of €1,731 million grew 28% Y/Y in Q3. Consolidated
revenue modestly beat our expectations with Premium outperforming
and Ad-Supported weaker than forecast. Premium revenue was €1,561
million, up 29% Y/Y, while Ad-Supported revenue was €170 million,
up 20% Y/Y.
For the Premium business, average revenue per user (“ARPU”) of
€4.67 in Q3 was down 1% Y/Y (down 3% excluding the impact from FX
rates). The largest driver of ARPU decline continues to be product
mix, although geographic mix also plays a role. As a reminder,
approximately 75% of the impact to ARPU is attributable to product
mix changes, and the remainder a function of changes in geographic
mix and other factors.
For the Ad-Supported business, revenue growth of 20% Y/Y
underperformed our expectations in Q3. Roughly 80% of the miss was
related to self-inflicted implementation and integration issues we
experienced with the rollout of a new order management software to
replace Google’s Doubleclick Sales Manager which was sunset in
July. This resulted in a combination of lost orders and under
delivery of other orders totaling about €9 million of “lost”
revenue. The balance of the revenue shortfall related to a slowdown
in programmatic growth from 65% Y/Y in Q2 to 48% in Q3, mostly
related to a slowdown in video PMP revenue. Programmatic revenue
was sluggish early in the quarter but regained momentum during Q3.
Podcasting revenue outperformed expectations with strong Y/Y growth
but is still a relatively small slice of the total Ad-Supported
business at less than 10% of total ad revenues.
Gross Margin
Gross Margin was 25.5% in Q3, 30 bps above the high end of our
guidance of 23.2-25.2%. The largest contributor to outperformance
stemmed from our core music gross margin. Royalty costs were more
favorable than expected due to product and revenue mix. We also had
lower content expense resulting from both lower overall spend and
the slower rollout of developed shows. Similar to the trends we saw
develop in Q2, Q3 saw continued efficiencies in streaming delivery
and payment expense.
Premium Gross Margin was 26.5% in Q3, down seasonally from 27.2%
in Q2 and up 40 bps Y/Y. Ad-Supported Gross Margin was 16.0% in Q3,
up from 15.8% in Q2 but down 260 bps Y/Y.
Operating Expenses / Income (Loss)
Operating expenses of €387 million in Q3 increased 11% Y/Y,
significantly less than the pace of revenue growth. Operating
Profit was €54 million, an Operating Margin of 3.1%. Share price
performance and the associated social charges were a significant
driver of this outperformance versus expectations, but we would
have been profitable even without this impact. Other drivers of our
better than expected profit in the quarter were higher Gross Profit
and lower than expected spend across artist marketing, promotion of
original content, R&D, and G&A.
The decline in our share price in Q3 decreased operating
expenses more than plan because of reduced social charges on
stock-based compensation. The decreased social expense contributed
approximately 160 basis points to our Operating Margin. As a
reminder, these costs 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.
Podcasts
We continue to see exponential growth in podcast hours streamed
(39% Q/Q for 3Q19), albeit off of a small base. Podcast adoption
has reached almost 14% of total MAUs. The U.S. accounts for the
largest share of podcast streams but share of listening is higher
and growing faster in several European countries. Podcast
engagement is clearly a growing global phenomenon.
For music listeners who do engage in podcasts, we are seeing
increased engagement and increased conversion from Ad-Supported to
Premium. Some of the increases are extraordinary, almost too good
to be true. We're working to clean up the data to prove causality,
not just correlation. Still, our intuition is the data is more
right than wrong, and that we're onto something special. So expect
us to lean into our early success with podcasting and to share more
insights with you when we've established causality.
We continue to ship updates to our podcast experience, and now
have more than 500,000 podcast titles available on the platform. Q3
saw the launch of 22 original and several other exclusive titles
from Spotify Studios such as The Ringer: The
Hottest Take and The Conversation with
Amanda de Cadenet in the U.S. We also announced the release
of a number of Gimlet and Parcast originals, including Gimlet’s
The Clearing and The Journal, as well as Natural Disasters, Medical
Mysteries, and the Summer of
‘69 from Parcast Studios. We are continuously working to
expand our global podcast library with the introduction of
El Primer Café in Colombia, and
London, Actually in the UK.
Two-Sided Marketplace
At our Investor Day presentation in March 2018 we said the goal
of our 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.
The strategy has been about going from a one-size fits all model
to a model that better fits the various types of content and
creators on our platform. Through a combination of tools, services,
and programs we will be able to serve creators better and build a
better business for Spotify by leveraging our demand creation
capabilities. So Marketplace is about meeting the needs of creator
teams to create art, engage with, grow, and better monetize their
fanbase.
These initiatives drive both revenue growth and content cost
savings. We expect to give more detail on the financial benefits of
the Marketplace and the impact on 2020 guidance on the 4Q19
earnings report.
Recent highlights of positive developments with our marketplace
strategy include:
- Spotify for Artists - Valuable analytics, identity
management, and promotion tools with more than 465,000 monthly
active artists, up 365% from the 100,000 announced at Investor Day.
These monthly active artists account for ~80% of the streams on
Spotify. Key recent additions to the feature suite is Canvas - a
tool that enables artist teams to add looping visuals to their
tracks. Many artists have seen substantial uplift in their streams
by using this tool.
- Sponsored Recommendations -
Available to select major and independent label partners as part of
our recently announced paid beta in the U.S., this is Spotify’s
first cost per click ad product which leverages our listener graph
of music tastes to promote new releases to free and paying
users.
- SoundBetter - In September,
we announced the acquisition of SoundBetter, a music production
marketplace for artists, producers, and musicians with 180,000
registered users.
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 €9 million of lease liability interest
expense in finance costs during the third quarter of 2019.
Free Cash Flow
We generated €71 million in net cash flows from operating
activities and €48 million in Free Cash Flow in Q3. We maintain
positive working capital dynamics, and our goal is to sustain and
grow Free Cash Flow, excluding the impact of capital expenditures
associated with the build-out of new and existing offices. We paid
out approximately €26 million associated with our office builds in
Q3. We expect to complete office build-out projects in Stockholm,
São Paulo, and Boston in Q4 2019. We expect to complete the
remaining projects over the next four quarters at a cost of roughly
€165 million.
We ended Q3 with €1.6 billion in cash and cash equivalents,
restricted cash, and short term investments.
Share Repurchase Program Update
On November 5, 2018, Spotify announced a program to repurchase
up to $1.0 billion of its publicly traded shares. During Q3, the
Company repurchased 1,130,675 shares at a total cost of $142.1
million and an average cost of $125.68 per share. Through September
30, the Company has repurchased 4,210,251 shares at a total cost of
$554.5 million and an average cost of $131.71 per share. This total
cost is approximately equal to the $552 million in cumulative Free
Cash Flow generated by Spotify since the start of 2018.
Q4 2019 OUTLOOK
These forward-looking statements reflect Spotify’s expectations
as of October 28, 2019 and are subject to substantial uncertainty.
We are reiterating our previous ranges with the exception of Total
MAU, which we are adjusting higher due to continued
outperformance.
Q4 2019 Guidance:
- Total MAUs: 255-270 million
- Total Premium Subscribers: 120-125 million
- Total Revenue: €1.74-€1.94 billion
- Gross Margin: 23.7-25.7%
- Operating Profit/Loss: €(31)-€(131) million
Given the performance of Spotify’s stock over the last twelve
months, let’s consider today’s guidance from a slightly broader
perspective. Look back to March 2018 before our direct listing.
Compare the Street’s expectations then for FY 2019 to our guidance
now. The 12 month target stock price then was $181 and the
consensus forecast (the average forecast of the 18 equity research
analysts who covered us prior to 1Q18 earnings) for 2019 was
actually lower than today’s guidance for this year’s results. The
business is outperforming and the stock price is down 33% vs. the
consensus. Sometimes the stock price reflects the performance of
the business and sometimes it doesn’t. But eventually, it always
does.
Street Consensus[2]
Spotify Guidance
MAU[3] (M)
256
266
Subscribers (M)
122
123
Revenue (€M)
6,610
6,755
Gross Margin
25.9%
25.1%
Operating Loss (€M)
(195)
(133)
Stock price (target/actual)
$181
NA
Note: Spotify guidance based on actuals for Q3 YTD + 70th
percentile of guidance for 4Q19
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 Barry McCarthy, 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: 4774562
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; our
dependence upon third-party licenses for sound recordings and
musical compositions; our lack of control over the providers of our
content and their effect on our access to music and other content;
our ability to generate sufficient revenue to be profitable or to
generate positive cash flow on a sustained basis; 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; potential breaches of our security systems;
assertions by third parties of infringement or other violations by
us of their intellectual property rights; competition for users and
user listening time; 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; ability to hire and retain key personnel; our ability
to maintain, protect, and enhance our brand; risks associated with
our international expansion, including difficulties obtaining
rights to stream music on favorable terms; risks relating to the
acquisition, investment, and disposition of companies or
technologies; dilution resulting from additional share issuances;
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.
Other sections of this report describe additional risk factors
that could adversely impact our business and financial performance.
Moreover, we operate in an evolving environment. New risk factors
and uncertainties emerge from time to time, and it is not possible
for our management to predict all risk factors and uncertainties,
nor are we able to assess the impact of all of these risk factors
on our business or the extent to which any risk factor, or
combination of risk factors, may cause actual results to differ
materially from those contained in any forward-looking statements.
We qualify all of our forward-looking statements by these
cautionary statements. You should read this report and the
documents that we have filed as exhibits to this report completely
and with the understanding that our actual future results may be
materially different and worse from what we expect.
Interim condensed consolidated statement of operations
(Unaudited) (in € millions, except share and per share data)
Three months ended
Nine months ended
September 30, 2019
June 30, 2019
September 30, 2018
September 30, 2019
September 30, 2018
Revenue
1,731
1,667
1,352
4,909
3,764
Cost of revenue
1,290
1,233
1,010
3,661
2,810
Gross profit
441
434
342
1,248
954
Research and development
136
151
135
442
393
Sales and marketing
178
200
146
550
457
General and administrative
73
86
67
252
241
387
437
348
1,244
1,091
Operating
income/(loss)
54
(3
)
(6
)
4
(137
)
Finance income
226
8
10
268
66
Finance costs
(10
)
(64
)
(85
)
(230
)
(582
)
Share in losses of associate
—
—
(1
)
—
(1
)
Finance income/(costs) -
net
216
(56
)
(76
)
38
(517
)
Income/(loss) before
tax
270
(59
)
(82
)
42
(654
)
Income tax expense/(benefit)
29
17
(125
)
19
(134
)
Net income/(loss) attributable
to owners of the parent
241
(76
)
43
23
(520
)
Earnings/(loss) per share
attributable to owners of the parent
Basic
1.34
(0.42
)
0.24
0.13
(2.96
)
Diluted
0.36
(0.42
)
0.23
0.09
(2.96
)
Weighted-average ordinary
shares outstanding
Basic
179,863,596
180,409,115
180,510,524
180,292,670
175,835,503
Diluted
188,477,554
180,409,115
188,120,122
185,788,598
175,835,503
Condensed consolidated statement of financial position
(Unaudited) (in € millions)
September 30,
2019
December 31,
2018
Assets
Non-current assets
Lease right-of-use assets
486
—
Property and equipment
270
197
Goodwill
489
146
Intangible assets
58
28
Long term investments
1,678
1,646
Restricted cash and other
non-current assets
68
65
Deferred tax assets
9
8
3,058
2,090
Current assets
Trade and other receivables
386
400
Income tax receivable
2
2
Short term investments
640
915
Cash and cash equivalents
877
891
Other current assets
73
38
1,978
2,246
Total assets
5,036
4,336
Equity and liabilities
Equity
Share capital
—
—
Other paid in capital
3,884
3,801
Treasury shares
(494
)
(77
)
Other reserves
1,052
875
Accumulated deficit
(2,500
)
(2,505
)
Equity attributable to owners
of the parent
1,942
2,094
Non-current
liabilities
Lease liabilities
618
—
Accrued expenses and other
liabilities
13
85
Provisions
6
8
Deferred tax liabilities
1
2
638
95
Current liabilities
Trade and other payables
519
427
Income tax payable
8
5
Deferred revenue
308
258
Accrued expenses and other
liabilities
1,259
1,076
Provisions
8
42
Derivative liabilities
354
339
2,456
2,147
Total liabilities
3,094
2,242
Total equity and
liabilities
5,036
4,336
Interim condensed consolidated statement of cash flows
(Unaudited) (in € millions)
Three months ended
Nine months ended
September 30,
2019
June 30, 2019
September 30,
2018
September 30,
2019
September 30,
2018
Operating activities
Net income/(loss)
241
(76
)
43
23
(520
)
Adjustments to reconcile net
income/(loss) to net cash flows
Depreciation of property and
equipment and lease right-of-use assets
17
17
4
51
17
Amortization of intangible
assets
5
3
3
12
7
Share-based payments expense
31
37
24
94
65
Finance income
(226
)
(8
)
(10
)
(268
)
(66
)
Finance costs
10
64
85
230
582
Income tax expense/(benefit)
29
17
(125
)
19
(134
)
Other
1
(10
)
(5
)
(1
)
(7
)
Changes in working capital:
Decrease/(increase) in trade
receivables and other assets
2
(50
)
(29
)
(13
)
(2
)
Increase in trade and other
liabilities
2
75
86
232
234
Increase in deferred revenue
12
19
5
44
21
(Decrease)/increase in
provisions
(44
)
8
(3
)
(36
)
(10
)
Interest paid on lease
liabilities
(12
)
(9
)
—
(25
)
—
Interest received
4
4
3
12
15
Income tax paid
(1
)
(1
)
(1
)
(4
)
(8
)
Net cash flows from operating
activities
71
90
80
370
194
Investing activities
Business combinations, net of
cash acquired
(7
)
(36
)
—
(331
)
(9
)
Purchases of property and
equipment
(26
)
(40
)
(49
)
(103
)
(60
)
Purchases of short term
investments
(268
)
(298
)
(54
)
(670
)
(769
)
Sales and maturities of short
term investments
245
370
279
998
1,160
Change in restricted cash
3
—
2
4
(9
)
Other
(4
)
(3
)
(22
)
(11
)
(35
)
Net cash flows (used in)/from
investing activities
(57
)
(7
)
156
(113
)
278
Financing activities
Proceeds from exercise of share
options
30
20
50
83
146
Proceeds from the issuance of
warrants
15
—
—
15
—
Repurchases of ordinary
shares
(125
)
(157
)
—
(408
)
—
Payments of lease liabilities
(4
)
(4
)
—
(13
)
—
Lease incentives received
15
—
—
15
—
Other
(4
)
—
(1
)
(4
)
1
Net cash flow (used in)/from
financing activities
(73
)
(141
)
49
(312
)
147
Net (decrease)/increase in
cash and cash equivalents
(59
)
(58
)
285
(55
)
619
Cash and cash equivalents at
beginning of the period
909
966
810
891
477
Net exchange gains/(losses) on
cash and cash equivalents
27
1
—
41
(1
)
Cash and cash equivalents at
period end
877
909
1,095
877
1,095
Calculation of basic and diluted earnings/(loss) per
share (Unaudited) (in € millions, except share and per share
data)
Three months ended
Nine months ended
September 30,
2019
June 30, 2019
September 30,
2018
September 30,
2019
September 30,
2018
Basic earnings/(loss) per
share
Net income/(loss) attributable to
owners of the parent
241
(76
)
43
23
(520
)
Share used in computation:
Weighted-average ordinary shares
outstanding
179,863,596
180,409,115
180,510,524
180,292,670
175,835,503
Basic earnings/(loss) per
share attributable to owners of the parent
1.34
(0.42
)
0.24
0.13
(2.96
)
Diluted earnings/(loss) per
share
Net income/(loss) attributable to
owners of the parent
241
(76
)
43
23
(520
)
Fair value gains on certain
warrants
(173
)
—
—
(7
)
—
Net income/(loss) used in the
computation of diluted earnings/(loss) per share
68
(76
)
43
16
(520
)
Shares used in computation:
Weighted-average ordinary shares
outstanding
179,863,596
180,409,115
180,510,524
180,292,670
175,835,503
Warrants
3,867,477
—
—
563,692
—
Share options
4,436,345
—
7,423,136
4,680,634
—
Restricted stock units
157,623
—
141,681
125,197
—
Restricted stock awards
50,623
—
44,781
47,223
—
Other contingently issuable
shares
101,890
—
—
79,182
—
Diluted weighted-average
ordinary shares
188,477,554
180,409,115
188,120,122
185,788,598
175,835,503
Diluted (loss)/earnings per
share attributable to owners of the parent
0.36
(0.42
)
0.23
0.09
(2.96
)
Reconciliation of IFRS to Non-IFRS Results (Unaudited)
(in € millions, except percentages)
Three months ended
Nine months ended
September 30,
2019
September 30,
2018
September 30,
2019
September 30,
2018
IFRS revenue
1,731
1,352
4,909
3,764
Foreign exchange effect on 2019
revenue using 2018 rates
(30
)
(96
)
Revenue excluding foreign
exchange effect
1,701
4,813
IFRS revenue year-over-year
change %
28
%
30
%
Revenue excluding foreign
exchange effect year-over-year change %
26
%
28
%
IFRS Premium revenue
1,561
1,210
4,448
3,397
Foreign exchange effect on 2019
Premium revenue using 2018 rates
(24
)
(75
)
Premium revenue excluding foreign
exchange effect
1,537
4,373
IFRS Premium revenue
year-over-year change %
29
%
31
%
Premium revenue excluding foreign
exchange effect year-over-year change %
27
%
29
%
IFRS Ad-Supported revenue
170
142
461
367
Foreign exchange effect on 2019
Ad-Supported revenue using 2018 rates
(6
)
(21
)
Ad-Supported revenue excluding
foreign exchange effect
164
440
IFRS Ad-Supported revenue
year-over-year change %
20
%
26
%
Ad-Supported revenue excluding
foreign exchange effect year-over-year change %
15
%
20
%
EBITDA (Unaudited) (in € millions)
Three months ended
Nine months ended
September 30,
2019
June 30, 2019
September 30,
2018
September 30,
2019
September 30,
2018
Net income/(loss) attributable to
owners of the parent
241
(76
)
43
23
(520
)
Finance income/(costs) - net
(216
)
56
76
(38
)
517
Income tax expense/(benefit)
29
17
(125
)
19
(134
)
Depreciation and amortization
22
20
7
63
24
EBITDA
76
17
1
67
(113
)
Free Cash Flow (Unaudited) (in € millions)
Three months ended
Nine months ended
September 30,
2019
June 30, 2019
September 30,
2018
September 30,
2019
September 30,
2018
Net cash flows from operating
activities
71
90
80
370
194
Capital expenditures
(26
)
(40
)
(49
)
(103
)
(60
)
Change in restricted cash
3
—
2
4
(9
)
Free Cash Flow
48
50
33
271
125
[1] Free Cash Flow is a non-IFRS measure. See “Use of Non-IFRS
Measures” and “Reconciliation of IFRS to Non-IFRS Results” for
additional information. [2] Street consensus for FY 2019 prior to
May 2, 2018 (date of 1Q18 earnings call) [3] Adjusted for
definitional change to MAU
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191028005331/en/
Investor Relations: Paul Vogel ir@spotify.com Public Relations: Dustee Jenkins
press@spotify.com
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