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| Statement |
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| Obviously, the market, a lot of ways continues to be choppy, but our FX-neutral high-teens growth on the advertising side, we think is really strong and really strong relative to the industry overall |
| The long-term opportunity for Spotify is strong |
| They're excited because they also see the momentum in how it currently translates to the business and that sort of momentum fuels that mind-set as well |
| And I think the good news is that the teams are excited |
| And I'm really proud of the team and the things that they're doing in this department and it wouldn't surprise me if we see many more innovative things come out of it, both on, of course, on the music side, but later on also reflecting that on the audiobook side and the podcasting side as well |
| We accomplished all of this by significantly exceeding our own expectations when we entered the year and against the backdrop of global turmoil and uncertainty and Q4 was a continuation of the story |
| And while I'm pleased with the level of growth we saw in 2023, perhaps what is even more gratifying is that it also marked a very different year for Spotify, a true evolution in how we operate our company, a year where we started to prove that we're not just a company that has an amazing product, but one that also is building a great business |
| And in general, we're very optimistic that you're going to continue to see gross margin progression throughout 2024 |
| So looking into 2024, you should expect a continuation of what you saw in 2023, strong product development, which leads to strong growth, but with an increased focus on monetization and efficiency, which in turn drives profitability |
| What I will say is while we're investing in audiobooks, we still see a nice improvement in gross margin through 2024, which Ben has talked about at length already on the call |
| So we feel really strong about sort of progressing towards the 20% targets |
| The top -- the funnel kind of our user side and subside looks very strong |
| We talked about it on the employee side but also, as Ben mentioned, with cloud costs, all the other things that we've been focusing on, that should give you confidence that 2024 will be a great year |
| And so given 2023, I feel really good about our ability to have healthy revenue growth throughout the year and with this smaller cost structures that we're having because of the focus on efficiency that we had really throughout 2023, we talked about it on the podcasting side |
| These include growing our users, creating new businesses with new revenue streams, and increasing revenue per user through price increases |
| And looking ahead, I believe 2024 is going to be another year of solid progress, led by an acceleration of revenue growth |
| And just to level set again, 2023, we walked into the year thinking that we'll have healthy top line growth and focus on the bottom line on efficiencies and that was pretty much the year, but we exceeded all expectations on the MAU side, which then translated into exceeding all of our expectations on the sub side and then when you top off that with price increases, that leads to a very healthy dynamic |
| I also wanted to provide a quick update on our audiobooks business, which is performing well and we are very excited about its potential |
| It's still early days, but the feedback from listeners and from the industry is extremely encouraging |
| Data shows that our entry into this market has dramatically accelerated its overall growth |
| So I mentioned that in my prior response, but the engagement has been very strong, very positively surprised about the content mix |
| So, yes, we're overall very excited |
| He's been a great partner and helped to solidify the position of the strength that we sit in today |
| We feel great about opportunities to enhance the partnership to any extent that, that creates opportunities |
| And yes, I don't think it has much of an implication, any other competitive dynamic but we feel good about the partnership |
| I feel great about the value we're bringing to the music industry |
| So I feel really good about where we are with our music partners |
| But what I can say is we feel really good about our relationship with our music partners |
| Q4 is a very strong quarter |
| Building on my earlier commentary, we feel very excited about the potential for 2024 gross margins |
| Statement |
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| So I think just to level set with everyone, I think when we had our Investor Day last year, everyone was probably expecting our podcast business to be a net adder to the business and probably thought that the music margins was worse than what they ended up being and obviously, as we outlined then, podcasting was a drag to the business, but something we were committed to turn around |
| And I know some of you may start to wonder if we're sacrificing growth for profitability |
| I'm surprised to see it's not growing faster than subscription revenue |
| But that said, that obviously leads to a concern then, okay, well, are we doing that to sacrifice at the expense of growth? And the answer should be, of course, not |
| The big concern always when you're making these things is you may see some healthy positive responses intra quarter, but then long-term, are you impacting the brand |
| As we previously disclosed, our operating loss was impacted by about EUR143 million of charges related to the efficiency actions we announced in December |
| But to do that, certainly in the Western world, which many of these markets being very heavily iOS influenced, we are precluded from doing it at a way where -- which could be profitable and good for consumers and creators because of Apple stance |
| And the last thing I'd also just remind you of the advertising business does get impacted more significantly by FX than the premium business |
| Now with that said, to touch a little bit, one of the things, of course, why we are talking about the Apple case is many things like, for instance, a la carte purchases, things like super-fan things like purchasing of audiobooks, top-up things that could be quite meaningful for Spotify's revenues is a significant hindrance today because Apple insists on taking a 30% cut, which in many cases, exceeds even our own cuts that we're able to take inside of the app |
| I mean the key things are probably not the surprising things |
| It had been in 2022 and '23 going down, the efficiency in some of our spend |
| And there is no question that we had to make some difficult decisions to put us on track to achieve our goal of being a consistently profitable company |
| So internally and externally, I think the biggest surprise has been the type of titles that resonate with consumers |
| So that's not where we need to prove |
| And I expect there's still some, but the question is still internally, we're still debating how much? The most important thing for us, as I said, is long-term growth still for the company |
| We're not saying, hey, we can never ever grow anything |
| I don't know, whatever, it's been better, to be honest |
| Now the good news, I guess, from the investor standpoint, and I know that there initially with some questions about whether or not this would be a downside for Spotify |
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