Spotify at Morgan Stanley Conference: Strategic Growth Insights

On Thursday, 13 November 2025, Spotify Technology SA (NYSE:SPOT) took center stage at the Morgan Stanley 25th European Technology, Media & Telecom Conference. Spotify’s CFO, Christian Luiga, outlined the company’s strategic priorities, emphasizing growth, margin expansion, and innovation. While highlighting positive user and subscriber growth, he also addressed challenges in advertising and gross margin variability.

Key Takeaways

• Spotify has increased its user base by nearly 300 million and added 100 million subscribers since 2022.
• The company is focusing on organic growth with a potential for non-organic opportunities.
• AI integration is crucial for personalization and cost efficiency.
• Leadership changes include Daniel Ek moving to Executive Chairman and the appointment of co-CEOs.
• Spotify’s advertising business is transitioning towards programmatic advertising, with an anticipated inflection point in 2026.

Financial Results

• User Growth: Nearly 300 million new users since 2022.
• Subscriber Growth: Added 100 million subscribers in the same period.
• Revenue Growth: Over 20% growth last year, with a slower pace this year.
• Gross Margin: Continues to grow steadily.
• Advertising Revenue: Growing at a low single-digit rate.
• Label Payouts: Paid out $10 billion last year.
• Liquidity: EUR 9.1 billion in gross liquidity at quarter-end.

Operational Updates

• Leadership Changes: Daniel Ek transitions to Executive Chairman, with Alex and Gustav as co-CEOs.
• Engagement Trends: Increased engagement in hours and days, with added engagement when users explore more platform verticals.
• Pricing Strategy: Transition to market-specific pricing decisions.
• Audiobook Expansion: Available in 14 countries, with plans for further expansion.
• AI Integration: Enhancing personalization and reducing costs.
• Advertising Transition: Moving towards programmatic automatic advertising.

Future Outlook

• Growth Strategy: Emphasis on organic growth, with non-organic opportunities considered.
• Margin Expansion: Continued improvement through verticals and pricing methods.
• Advertising Business: Anticipates a turning point in the second half of 2026.
• Market Opportunity: Only 3% of the global population currently pays for Spotify, indicating significant growth potential.

Q&A Highlights

• Leadership Continuity: Co-CEOs expected to maintain strategic consistency with Daniel Ek’s involvement.
• Value-to-Price Ratio: Focus on maintaining a favorable gap to minimize churn.
• Price Increases: No significant change in churn observed from recent price hikes.
• Tiering and Segmentation: Exploring further segmentation, including a premium tier.
• Competitive Position: Claims leadership in subscribers and listening hours.
• AI Opportunities: Leveraging AI for personalization and efficiency.
• Capital Allocation: Prioritizing reinvestment in growth, with stock buybacks to offset dilution.

For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - Morgan Stanley 25th European Technology, Media & Telecom Conference:

Unidentified speaker, Host: To the conference for the first time in this role as CFO of Spotify, Christian Luiga. Christian, thanks for being here.

Christian Luiga, CFO, Spotify: Thank you very much.

How does being here with Spotify compare to your prior roles?

Oh, I just realized this morning I haven’t been here since five years ago when I was here with Telia.

Yeah. We renovated the hotel for you.

Yeah, it’s fantastic. It’s a beautiful hotel. It’s a beautiful city. Actually, I think this—I don’t say it because I’m sitting here—is one of the better conferences in the year.

OK, take it. We’ll take that. I would love to hear why you decided to join Spotify after such a long and successful career in telecom and defense.

I got an opportunity that I had to think about for a while. It is really a couple of things that attracted me to Spotify. One of them is I wanted to work for a true tech company. We talk about content and the music and podcasts and audiobooks on Spotify, but it is really a tech company in its true heart. Secondly, it is a global company. I wanted to work with something to see how and work with the scale of a global company. Thirdly, the culture and leadership. I have some experience from Daniel and Martin since before. I wanted to work with them also. I am getting a little bit old. You need to figure out what you want to do before you become a pensioner. Finally, I wanted to get closer to the US. It sounds strange.

I’ve done now over 80 reports to the market. Before this company, I haven’t done any on the New York Stock Exchange. That was something also for me to tick the box. Get close to the US. So much happens in the US, definitely now also to be close to that country and what happens coming out of the tech side in the US as well. That was for reasons that was very strong for me.

That all makes sense. Before you joined the firm back in 2022, Spotify had an Investor Day, which we still talk about three years later. At that event, the company laid out some long-term ambitions, including reaching a billion-plus MAU, which I think people were skeptical of at the time, gross margins in the 35%-40% range, EBIT margins in the 10%-20% range. As the CFO coming in over the last year and sort of looking at setting up the business, what are your kind of main priorities to make sure the company’s able to deliver on those ambitions?

Yeah, I think it’s not that far away, but still some years ago. I get that question a lot going back to 2022, how do you look at those goals? Just starting from that day to today, like you say, it’s quite amazing. We have increased our users with close to 300 million. We have 100 million more subs just in that period. That goal that feels very hard to achieve, we are really running at that goal. The proof point is really in that we are delivering. We’re delivering then also through 2024 and into 2025 with the profitability coming in and the growth continuing to be there with over 20% growth than last year and pacing somewhat below that this year. We also know that the monetization is coming in into next year.

I feel very strong about our position in that sense that we also have a year now when we have sort of reestablished ourselves a bit and are not really making ourselves prepared for going forward. On many things that I know we’re going to talk about today that makes me very confident that we can continue to drive towards these goals and beyond those goals.

There was some pretty big news at the top of Spotify. I know your relationship, you mentioned before you’ve known Daniel and Martin for a long time. Folks were a bit surprised when the company announced that Daniel was going to be moving from CEO to Executive Chairman, Alex and Gustav stepping into those co-CEO roles. The stock sold off, as you know, that day. What should investors take from that announcement? What changes at Spotify should we be thinking about as a result?

Let me bring that because now you’ve brought it up twice. I actually met when I worked at Telia, which I know is here in this conference as well. Back in 2008, Daniel and the team, then being more in the basement in Spotify and dealing with a super cool product called Spotify, they realized that they—and they’ve been very open about this—they missed the mobile journey. I was working at the telco, realizing also how fantastic the mobile journey was because mobile subscriptions and mobile phones were just going crazy. No one can really imagine how fast that mobile conversion would happen, not even Spotify. They came to us at Telia. We had a dialogue. We started a partnership where we actually preloaded the Spotify, partly exclusivity-wise in the beginning. We invested actually in Spotify.

I did a capital allocation that was a little bit criticized for into Spotify at that time.

You’re an early investor.

Early investor in Spotify. Then we stepped out there. That was when I met actually Daniel and Martin for the first time. Now, if you look at your question here on what happens really when Daniel says, I’m going to leave the CEO role and become an Executive Chairman, I think a couple of things here to remember is that the current setup, and that has been for the last years, is really that Alex and Gustav have been co-presidents. Gustav has been running the tech side and Alex the business side. There have been no other business people reporting to Daniel over these last years. On top of that have been functions like finance, legal, and so on reporting to Daniel. Really, from a business point of view, not much change is happening with this step up.

Daniel will continue as an Executive Chairman as well, which means more from a European point of view, he will spend time as needed and as he feels appropriate, which is maybe more often than we think when he gets involved in the strategic and long-arc thinking in the company, the capital allocation, and also other long-term decisions that need to be made. He will be in the office. Actually, he will have an office in our office for good and bad. I think it’s really good and be part of the company. I think there is a change. That is also very natural because Alex and Gustav have proven over these 15 years they worked with Daniel that they can be part of big transformations. They know each other very well. They know how to develop the culture of Spotify together.

I think that is a very strong element in this change.

OK, got it. There is a lot of continuity still, even with changes in the titles.

Plenty.

Yeah, great. OK, why don’t we shift a bit to sort of the business and talk about some of the big growth drivers? There’s a lot of focus among investors on engagement, not just at Spotify, but kind of across streaming. You guys were pretty vocal on the earnings call about the engagement just being at least qualitatively strong. What trends can you share with us in terms of listening behavior, time spent that gives you confidence that the business is healthy?

First of all, engagement is a very important part for sort of our measurement. You could say sometimes it could be even more important than the number of users. Engagement actually is giving feedback to us that we are creating value to our customers. Value is what we want to drive every day. We have this value-to-price metrics that we work with. Value is extremely important. Engagement is one of those things that we measured with. We can see every quarter this year that the engagement is going up, both in hours and also in days. Days and hours are important when we talk about how many days in a month are you engaged in our platform and how many hours are you engaged. We also see very positively because we are moving into these new verticals.

There’s a lot of talk about music with Spotify. We have audiobooks and we have podcasts. We may have more verticals over time. When someone engages with one more vertical on top of music, the engagement increases. It does not cannibalize. You do not use less or the same number of hours, and you do not just shift it from music to podcasts. You actually add hours. If you do not go for books, you also actually add your engagement. The loyalty and the churn goes down dramatically. We see that combination of verticals as a very strong driver for our growth, but also for keeping customers happy.

You talk a lot about value-to-price and wanting to maintain a gap so the customer is getting value above and beyond what they pay. It’s easy to measure what the price of Spotify is. How do you measure, how does the company think about and measure value, especially for a business that’s operating in so many countries around the world?

We do measure value actually internally. You have to do it sometimes a little bit as an estimate. Sometimes you could do it with external data. If you have a comparison product to someone else, of course, you can measure that value. If I give you 15 hours of books, then I can measure that from a pricing point of view. If I give you mixing tools, it’s harder to measure that value. You can measure that value then in engagement and engagement increase. You can see what does that mean in monetization for us over time. You can measure that. We want to keep that gap because the time is still out there to be taken. I mean, we still have the positive thing in this.

One of the reasons actually I joined is this is a fantastic growth company also. We have such a potential for future growth. It is not just taking market share. It is actually growing the market per se. Doing that is one part of this thing that we create value. We can get more users. That can become subscribers. Then we can monetize on that. That flow continues to be a very strong driver strategically internally. Every time we have a management meeting, we actually go through this flow pretty much in some way talking about what we are going to do in the next month.

You guys have had a number of price increases over the last year and a half. You are able to test certainly that value-to-price. You have rolled out some price increases quite recently, including some markets, I think, for the first time. How has churn generally progressed versus your expectations? What is that feedback loop telling you about your sort of ability to get that value-to-price ratio right?

We haven’t done that many price increases that we have also been told by many people. And some people forget about it. But we haven’t done that many. You can say we don’t have a long experience of churn to price increases. We have an experience. So far, what we’ve seen is that we have, A, to start with, quite low churn relative to other industries. Secondly, from our price increases, we haven’t seen any changes in churn, not even this time on the more than 150 countries that we increased in. There’s no material change in churn from this. We will see then as we go forward. I think keeping a value-to-price gap also helps that philosophy of keeping churn down. I mean, I think you’re spot on on something that churn costs quite a lot of money.

If you can keep that churn low, that will be a good business logic also going forward because retention is clearly something that is usually worth it if you find a good model for it instead of trying to just chase new customers all the time.

Sure. I know you said you haven’t taken that many price increases. Investors have a strong view on what you should do. If you look at the last 18 months, I think you’ve raised prices across pretty much the whole user base at least once. Is that a way? Is that kind of timeline, sort of every year and a half, roughly the whole customer base? Is that a cadence that investors should be thinking about as what could be going forward?

No, I don’t think that is something we actually want to establish as something that people should think about. We have a very strong pricing power position. I think that is a starting point. That gives us flexibility. It gives us an opportunity to actually decide how we want to work with our value-to-price metric to each individual market. That is the second part of this. It’s actually very individual. I think you as an investor should see more and more. Now, there were many countries coming at the same time. The more we mature and become market leaders in different markets, you will see that the individual markets will be more assessed individually and not as a collective.

That goes naturally that each market has their own situation and dynamics, both from a competitive but also for how culture is actually used in different markets. That will give us a different driver. We may also have different verticals in different markets. Like, we don’t have audiobooks in all markets. That gives us also a different sort of view of how we should approach that market. I think it’s going to be more individual. We’re going to try to keep that pricing strength that we have today and make that possible then for us to have more individual decisions.

OK. So the signals you look at increasingly vary, it sounds like, across countries depending on what the offering is, competitive environment, all those variables.

Yeah. I think it’s going to be much more so also going forward. Maybe naturally, it will be happening at the same time anyway. It is going to be more individual decisions that we do. We have then the opportunity to do that because we keep the pricing power. We have a scalable product that makes it easy to do pricing moves.

How do you guys think about customer segmentation, product differentiation? There’s obviously a lot of focus on a premium tier or super VIP tier. What’s Spotify’s perspective on further tiering and segmenting the customers across all these countries?

I think the whole thing of verticals and tiering is important. We have many metrics for how to drive growth. One is to have more verticals, of course. One is to bring value to our platform in different ways with features and so on. Tiering is an important part of that. I think the way to think about it is how we utilize the portfolio and how we balance that. Also, back to that we talked about just in the previous question on different markets also in different times, how to actually scale out and differentiate. I think we have a great first signal from now the audiobook side, for example, where we drive an audiobook inclusion in the premium portfolio. You have Audiobook Plus, where you can actually take up your subscription to a higher level.

You have à la carte, where you can buy a book only additional if you want to buy just that book and not buy more hours. We are starting to not experimenting with working with different ways of driving that tiering and with more verticals and more ways of doing this. I think you will see more of that coming actually in the next 12 months tiering from our side.

Great. Yeah, it sounded on the earnings call like the Audiobook Plus rollout’s been a success. I’m not sure what your internal expectations were. It seems like that kind of premium within that vertical is working so far.

Yeah, we did a, I mean, in the US, we did a quite cool campaign. I don’t know if you saw anything of that in August. Of course, like everything you have, I usually compare it a little bit with your benefits you have at work. Do you know all the benefits you can actually get at Morgan Stanley? It’s a little bit like, does our customers know exactly what they can get out of our product? You need to do some marketing sometimes also to just educate and get them to feel what they have in this fantastic platform. We did a campaign in the US that I think was very successful. We added a little bit of advertising to it.

We could see a pickup rate on not only actually audiobooks in general, but also the additional products, as you say, Audiobook Plus and so on. I think that was a fantastic test for us to see that if we reach our customers in a good way, they are attracted and they like what we are delivering to them. We have 14 countries today. I am quite sure we will have more countries when we end next year. We are looking forward to sort of collaborate with different publishers around the world and get more books out to our customers.

You have 14 audiobook countries or 14?

Yeah.

OK. Yeah, and more will come.

Hopefully. You have to work with it every day. It’s not that we’re sitting still. I mean, hard work.

Yeah, I’m listening to so many podcasts that the only way I can start listening to audiobooks is to scale the podcasting back.

Oh, OK.

mean, figure out how to make all that work. That campaign probably didn’t reach me, unfortunately.

You may be super used to them.

If there’s a Podcast Plus, I’m in trouble.

Yeah, I’m very curious to see your Wrapped in a month.

Yes.

We should compare notes there.

Yeah. Unfortunately, my kids use my profile. That’s a disclaimer for everybody when they see my Wrapped campaign. Anyway, why don’t we talk? There was one thing that I wanted to come back and ask you about from the earnings call specifically because I’ve gotten a lot of questions about it from investors, which is about margins, gross margins in the near term. You proactively mentioned on your prepared remarks that the first quarter gross margins, you’re reminding the market, are typically down quarter on quarter from the fourth quarter seasonally. Can you just talk a little bit about what drives that and how we should think about kind of margin variability as you invest in growth ahead of next year?

Yeah, I think the thing is that we are comfortably growing our margin. And we also state that we will continue to grow our margin. It’s not something that just because of that statement you should be worried about. We feel very strong about the progress we have and going forward also how it looks like that we can deliver on that. The typical thing between quarter four and quarter one specifically is that quarter four is our strongest advertising quarter. And quarter one is typically our weakest advertising quarter. I don’t see any reason why we should see it differently this year in quarter four of 2025 and quarter one of 2026. We will have that gap again. No matter it’s slowly increasing, it is actually going to be a gap between quarter four and quarter one.

That is what we are trying to just make sure that we are clear on, giving what we can give to the market in just expectation management. The main drivers really, I mean, we have our marketplace position that we work with that continues to help us. Even more, I would say, the verticals and how we just talked about audiobooks and other ways of doing new pricing methods is on the Audiobook Plus and top-ups and other things. It is going to be also a very good driver for growth and margin expansion over time. We actually want the advertising business per se. We believe the advertising business per se will be a margin expansion lever also. Those three are probably the main reasons why you should feel comfortable that we can grow margin over the coming years.

Great. That’s helpful. You had a very busy 2025 with your label relationships, signing new deals with a number of certainly all the majors have been announced. I know a lot of work goes into that. These are important partners. Can you just talk about where Spotify stands in its label relationships? What did you accomplish through all the hard work of getting these deals done in the past year?

Yeah, it is hard work. It’s one of those things that you really don’t understand when you come from the outside coming into the company. If you would ask me, what are you sort of not surprised about? What did you learn new in this company? You learn a lot of new stuff. One thing is how much work it goes into actually establishing the relationship, having the dialogue, and getting to a win-win position in the end with these different labels and publishers. It’s really hard work. It is a good cooperation also. I actually think that one of the things we try to convey, and it’s actually very true also this year, is that it is a win-win approach to all this. I know many people wonder what that means.

In reality, I mean, we negotiate so we get a possibility to innovate and bring things to the market. Last year, we paid out $10 billion to the market, which has then increased over the years, many, many years, and doing that and still becoming profitable and increasing our profitability. That is really how we see this going forward. We do negotiations that we have a better position to innovate and deliver things. This fall, we delivered 30 more features to the market. Of course, that is based on our technology leadership and where we have, as I said, a great tech company. That is also then a precondition for that is that we have the licensing and the rights. That is how it goes together.

With this, you can see that this gives us a platform for the coming years to continue to innovate and deliver even more features over the next years, bringing more value, more subscribers, and having a higher pricing power. Sort of that is the cycle we then do this for. That should drive more growth for us. That is really what we were looking for.

Yeah, it seems like the enhanced free tier is an example of more rights, more. And then you’re seeing MAU growth at least pick up in the third quarter, which was nice.

Yeah, the free side is extremely important for us. I think we forget to talk about that sometimes. But 60% of our subscribers comes from our free tier. It is really a funnel, a sales funnel for us. How do you reach customers out there? We go out with something that is free, and you can use, and you can get acquaintant. You can start to build some playlist and stuff for yourself. When you really like it, you want it all. Maybe you suddenly also have some more money as an individual. Then you pay up and become a premium. That is a very important sales funnel, but also a way for us then to, of course, scale our advertising business.

Sure. I want to ask you about Spotify’s competitive position. I think generally people feel like you’re winning in the market. Ever since it became a public company, we worked on the direct listing, I think it was seven years ago or so. There’s always the question, everyone has the same music. How do you differentiate? I think as a user, you kind of intuitively sense the differentiation. I’d love to hear from you, someone inside the company, how you think about the product and how it’s positioned versus the other platforms as you continue to try to grow market share, which you guys said you expect to do on your earnings call.

Competition is good to start with and everywhere. I mean, it helps you to develop and innovate in any industry. Of course, you want to be number one. We want to be number one. We feel that we have that market leadership today. We definitely have most subscribers. We also have most listening. The streaming share in the world, we are around 60% or plus. We have more of the subscribers also than anyone else. That is ways of sort of measuring our competitiveness. In reality, it comes back to the question you had before on engagement. I mean, we try to not think so much about the competition per se. If you are a market leader, you need to think about how do you continue to innovate?

How do you continue to bring engagement to the product and platform? With that, you will probably win the hearts of all these consumers. You will be a very relevant and loved platform for the creators. That is the other thing here. We need to be attractive for our creators. That’s something that we think we’ve been very successful in on the podcast side. Why does a creator want to come and put their stuff on our platform compared to another one? Another way to become very competitive is to make sure that you have that access to the creators, and they want to put their stuff on your platform. This is really how we work with this. I think that we feel comfortable in that sense that we know how to innovate.

We feel that our stats are showing that we are a good leader. In each individual market, of course, where we’re not, we will continue to strive to be one or two in the market. That’s how it is.

That’s great. Thank you. Speaking of innovation, I wanted to ask you about AI, generative AI. Gustav’s talked a lot about it on podcasts with a lot of enthusiasm. I know Daniel’s focused on it. Maybe just starting high level, how is Spotify and the management team thinking about taking advantage of this incredible technology?

It is an incredible technology. It will, of course, help us. It has helped us a lot in our cost structure to start with if we just.

Already.

Take that away. Yeah, already. Both in, especially in Gustav’s area, where we have over half our employees are R&D people. And there we see a big achievement. We also openly spoke about that in the last quarter report that many people have asked us, why have you had such a shitty experience on the Apple TV setup when you have it on Samsung and all the other platforms? We didn’t find a return on investment for it. We didn’t feel that it was worth to put all that money to actually develop the Spotify product onto the Apple TV. Then actually, Gustav’s team figured out how to use AI to take the iOS mobile phone setup and figure out how the Apple TV was built in the same way and how to convert our product there.

We did it at, I would say, less than a tenth of the cost that we had from the beginning. Suddenly, we did it actually this year because we had the use of AI to make a return on investment. It shows that we are disciplined in what we want to do, but also that we want to do things to actually drive our Ubiquiti story. That is really what this is about a lot, Ubiquiti story. We want our users to be able to be everywhere and use it on everything. That goes back to OpenAI. Now OpenAI comes in here and did a partnership with us during this year and also just a month ago.

Also the AI in general, if that’s going to be in everyone’s life, how do we relate to that and how we make sure that the Ubiquiti story is also relevant here? That you can actually on OpenAI then search and do something with your Spotify data and get a better experience from that. We need to be part of everyday life wherever you are with the Spotify platform. That is one of those journeys. AI is going to be very interesting and give us new ideas of how to innovate and bring things out. I’m sure we’re going to see much more of that as well coming.

You guys have rolled out stuff like AI DJ, AI Playlist, personalization, and music discovery. Such a huge part of Spotify.

Do you use it?

I do. I do. I even met the voice behind the AI.

Yeah, yeah, you did.

It’s a real person. It’s not a robot. It’s not a robot like the person walking out of.

He’s a super nice guy.

Yeah. Are you guys excited about using Gen AI to take personalization sort of to new levels? Is that an opportunity that you see?

Absolutely. I mean, this is part the partnership with OpenAI is one way of actually bringing personalization to another level. Our AI DJ and these things are also a way to personalize better. It is really important to understand that in the past, it was very simplified. We worked with LLM since, I mean, Gustav started 2014, actually, working with this. So we have a long experience. I think this is back to this is really a tech company. Again, I emphasize it again. 2014, we already started working on these things and tried to figure out how we could use machine learning and other things to develop the product for personalization for you. That means that we have practiced quite a long time. We are good on the path to become really excellent also in the next wave of doing things here.

I feel confident that we will continue to see that. What I wanted to say is that when you just work with the traditional measures, you miss something still. You can be even more personalized if you can start to speak to us, if you can start to write to us. We will have more data about you that is even higher quality that we can use in figuring out which podcast did you listen to and why. We do not know if you end that podcast halfway through because you would just have to go and see your mother.

Go interview a CFO.

Or go interview a CFO or just late to breakfast or if you did not like it. If you start to talk to us or if you start to write with us or if you share something with someone, if you send it to Brian and said like, OK, I love this podcast. We have a new data point that we can use in personalization on you. That is also something that is cool with AI that we can actually figure out more how to give you a very good experience.

Yeah. That’s a great point. Investors are so focused right now on companies that will either be disrupted by or embrace AI, often looking at putting companies in particular buckets. I thought it was really interesting that you guys had this integration with OpenAI. I mean, most people are viewing that as a competitive threat to a lot of companies. It’s interesting that that relationship has turned into an integration to product.

Yeah. I mean, it was a way for us to, as I said, drive the ubiquity journey where you can actually more people are going to be on OpenAI. And how can they take use of that? Still, we keep our interface with you and our data with you. But you can actually work with OpenAI to get a better experience.

Build the playlist. I’m done. OK, I know we only have a few minutes left. I wanted to come back to the advertising business. It is a smaller part of the revenue stream today. I think you guys have a lot of ambition to accelerate the growth there. I know you’ve put a lot of change into the organization in 2025. What’s working and what’s not working? What do you need to get right to get this business growing at the levels you’d like it to?

I would say that most things are working, actually. We are a little bit behind. We decided that 2025 would be. We started already in 2024 to say we need to change the strategy and work forward. This year is a transition year. It has been clear to us that this is a transition year. We need this year to come through. We also made a statement that second half of 2026, we see the inflection point where we are moving a lot of our advertising from direct brand advertising into programmatic automatic advertising. That journey is ongoing. What you say, what did not work maybe or what has been sort of more a struggle has been the timing of it, sort of how fast we move. It takes time. It takes time to move your customers from one platform to another.

It takes time to set up the new DSPs that we have done lately, Amazon and Yahoo. You put them on there. It takes a couple of months before they get going. We have changed leadership. We have worked with our R&D also internally to improve the interface to our customers so they can go in today and really create something. They can buy something. They can measure something on our platform. Now they’re getting used to that. We see that growth being very healthy in the programmatic side, more than very healthy, I would say even. Of course, we have a decline when we move our customers from the traditional side. That inflection point will be then in the next year where we see that that will compensate enough.

That said, I have to say on a like-for-like basis, we’re still growing.

Sure.

It’s not like we’re not growing. We’re growing low single-digit growth in the advertising business still. It’s not like a negative drag on the group on top line.

Got it. OK. Maybe just lastly, I wanted to ask you, you guys started buying back stock recently. You’ve got a lot of cash on the balance sheet. You were talking earlier about your Spotify investment at Telia all those years ago as capital allocation decision. How does the company think about your strategic priorities and sort of capital allocation now that you’ve set this company up for free cash flow generation from looking forward?

Yeah, we had EUR 9.1 billion in gross liquidity at the quarter end. We have a convertible debt that is due at quarter one. We have a good position. I think the first thing is that we want to have a strong balance sheet position going into the next years because we just want to have that to make sure we can deliver on our strategy. That strategy is to continue to grow. We have a growth strategy. What do we do with the capital allocation? First and foremost, back into the business to grow the business. If that needs also to be things outside the business, non-organic, we will be open to that. It is foremost a growth and organic growth journey we want to do because we have such a strong platform to build from.

As we said, if we have excess cash, and the question is, what is excess cash? I haven’t answered that question. I will not do that today either. We will actually go back to the shareholders a bit. What we said right now, I think it’s actually a very fair way to use your balance sheet if you have enough liquidity is to actually make sure that the dilution from our stock option programs are repurchased. Each shareholder feels that they own the same amount no matter what. We don’t have, I would say, comparison-wise, we have a quite fair number of, sort of, not too high number of shares that need to be bought back. It’s not going to be big money to handle that repurchase.

We started to do that now this half year, which was, and we do it optimistically, which means that we’re not going to have a program in place either for that. I would say there’s a lot of interesting opportunities back to what you talked about earlier on new verticals in general when it comes to the music platform per se and when it comes to growing from a competitive point of view on how we could use that money. AI is also coming into the picture over time, as you said.

Sure. Anything you want to leave us with as we wrap up in terms of your outlook for the company and what most excites you about the years ahead now that I think you’re a little over a year into your tenure as CFO at Spotify?

I was on stage just before Christmas last year. I got the same question. What was my excitement was, I said, growth. To be a little bit fair, I was not really 100% sure about that statement at that time because I was so new into the company. I had not sort of done the first planning cycles for the company, looked through and worked with all the managers good enough. I can just reinforce that I feel that this company has such a great opportunity to take care of this platform and this customer base. We forget about like the $700 million we touch every month out there. Soon, $300 million, $289 million guidance per year-end in paying customers.

That platform and with all the technology coming and being a tech company, I think with the opportunity, that actually is overwhelming sometimes how much we can do. It is fantastic to see that that is the opportunity that I’m most excited about. I think that when it comes to sort of continuous profitability and improving margin, we have shown and I have seen that we have a very strong culture internally of one team. That means that if we decide to be disciplined, like with the Apple thing or something else, we are disciplined. We can then decide how we want to drive that margin and cost structure based on what we think we can deliver on growth. I’m looking at the top line here up here.

Yeah. I see top line growth. Like you’re seeing it.

I forget the numbers.

Yeah, the growth.

The growth numbers is so I think that excites me a lot. And there’s still so many markets and so many people.

So many verticals.

Yeah. Today, we have 3% of the population paying for Spotify.

Yeah.

Why not think that maybe 10% can do that or 15%? We do not have to have crazy numbers. That is actually an opportunity in itself, just put that number in front of you. Like, oh, 3% of the whole world is there. Why not 10%? Ten is not a sort of crazy number. That is really how we look at it internally. As I said, I go back to where we started. Since 2022, we already achieved quite a lot there with $300 million and 100 million subs in those years. Why not continue?

Yeah. You’re excited about growth. Now you mean it. Good to know. And margin expansion, which is great to know.

Yeah. Anything else?

That’s all we got. OK.

Thank you, everybody.

Thank you.

Thank you.

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