Yahoo Finance Spotify Technology S.A. (NYSE:SPOT) Q1 2024 Earnings Call Transcript
Spotify Technology S.A. (NYSE:SPOT) Q1 2024 Earnings Call Transcript April 23, 2024
Spotify Technology S.A. isn't one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).
Operator: Thank you for standing by. My name is Krista and I'll be your conference operator today. At this time, I would like to welcome everyone to the Spotify First Quarter 2024 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there'll be a question-and-answer session. [Operator Instructions] Thank you. I would now like to turn the conference over to Bryan Goldberg, Head of Investor Relations at Spotify. Bryan, you may begin.
Bryan Goldberg : Thanks, operator, and welcome to Spotify's First Quarter 2024 Earnings Conference Call. Joining us today will be Daniel Ek, our CEO and Ben Kung, our Interim CFO and VP of Financial Planning and Analysis. We'll start with opening comments from Daniel and Ben, and afterwards we'll be happy to answer your questions. Questions can be submitted by going to slido.com, S-L-I-D-O.com, and using the code #SpotifyEarningsQ124. Analysts can ask questions directly into Slido, and all participants can then vote on the questions they find the most relevant. If for some reason you don't have access to Slido, you can email Investor Relations at ir@spotify.com and we'll add in your question. Before we begin, let me quickly cover the Safe Harbor.
During this call, we'll be making certain forward-looking statements, including projections or estimates about the future performance of the company. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Actual results could materially differ because of factors discussed on today's call in our shareholder deck and in filings with the Securities and Exchange Commission. During this call, we'll also refer to certain non-IFRS financial measures. Reconciliations between our IFRS and non-IFRS financial measures can be found in our shareholder deck, in the financial section of our Investor Relations website, and also furnished today on Form 6-K. And with that, I'll turn it over to Daniel.
Daniel Ek : All right. Thanks, Bryan. And hey, everyone, and thanks for joining us. I hope you've had the opportunity to review our shareholder deck. Overall this was a solid quarter driven by strong revenue growth, expanding gross margin and the largest operating income we've ever posted. Our performance speaks to what I covered last quarter when I described our outlook for 2024, a year of solid progress with monetization and resourcefulness taking center stage. But Let's discuss our MAU growth this quarter. We missed our target due to a bit of a slowdown at the start of the year. So I want to directly address the three main factors contributing to this outcome and how we're adjusting over the next few quarters. First, the MAU and subscription growth we achieved in 2023 not only surpassed our most ambitious forecast, but also set a record for the most significant user growth in Spotify's history.
While we anticipate continuous robust growth going forward, 2023 was a truly standout year and should not be a based on expectation for every subsequent year. Another significant challenge was the impact of our December workforce reduction. Although there's no question that it was the right strategic decision, it did disrupt our day-to-day operations more than we anticipate. It took us some time to find our footing, but more than four months into this transition, I think we're back on track. I expect to continue improving on our execution throughout the year, getting us to an even better place than we've ever been. The third issue is related to marketing spend. In hindsight, we probably pulled back too significantly throughout 2023 and as such we're already correcting this as we move into Q2.
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