Spotify Technology — Call Transcript 2026

Good day, and Welcome to Spotify's Fourth Quarter 2025 Earnings Call and Webcast. All participants are in a listen-only mode. If you require operator assistance at any time, please press star zero. As a reminder, this conference call is being recorded. I would now like to turn the call over to Bryan Goldberg, Head of Investor Relations. Thank you. Please go ahead. Thanks, operator, and welcome to Spotify's fourth quarter 2026 earnings conference call. Joining us today will be our founder and Executive Chairman, Daniel Ek; our Co-CEOs, Alex Norström and Gustav Söderström; and our CFO, Christian Luiga. We'll start with opening comments from the team, 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 hashtag SpotifyEarningsQ425. 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 [email protected], 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 differ materially because of factors discussed in 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. With that, I'll turn it over to Daniel. All right. Hey, everyone, and thanks for joining. As a short counting exercise has just shown me, this is my 32nd earnings call, and as you know, this was the last one that I did in the role as CEO. Alex, Gustav, and Christian will give you an overview of the business and cover the quarter, but before I hand it over, I wanted to share a few thoughts. First, I want to say gratitude to the incredible teams at Spotify, to the artists, creators, and authors we build for, the more than three-quarters of a billion people listen with us daily. Thank you, and thank you to all of you as well. I can say that I've generally valued these conversations with our investors, with analysts, and even the tough questions. Getting to build a company like this and to share that journey with people who care about where it's going, it's been a real privilege. From day one, our focus has been simple: build the best experience for listeners, be the best partner for artists and creators, and do it in a way that scales globally. That remains true almost 20 years in. For those participating on the call, I know a huge portion of your role is scoring the companies you cover. If you want a framework for evaluating Spotify going forward and what to hold us accountable to, I'd point to three key things, and then you must also layer on the culture that makes them possible. First, we solve problems at the intersection of consumers and creators. This is where we focus. If something is good for the consumer and also good for the creator, that's where you'll find us every time. Discover Weekly, Wrapped, Spotify for Artists, our new mobile Free tier, these aren't just features, they're proof points. We build tools that help artists reach listeners they'd never find otherwise, and in turn, help listeners discover music they didn't know they'd love. And we built an ecosystem where artists, listeners, creators, authors, and advertisers reinforce each other. That intersection is where we've always won, and it's where the next decade gets built. Second, we are first and foremost a technology company. We've said for years that we aim to be the R&D arm for the music industry. And if I may say so, nearly 20 years in, I think we've earned that. We drove the ship from downloads to streaming and subscription, and we proved the model could work at scale. But here's what excites me the most. Our capabilities now extend far beyond music. Today, what we built is a technology platform for audio and increasingly for all the ways creators connect with audiences, and this identity will matter even more going forward. The next wave of technology shifts, AI, new interfaces, wearables, new ways of interacting with content, these will reshape how people discover and experience audio and media. The hard problems ahead in music and podcast and books and video, in live, and in things we haven't even built yet, we're going to keep building the technology to solve them. Third, we play the long game. When we went public in 2018, I talked about long-term value creation. While I know many of you focus quarter to quarter, that's not how we grade ourselves, and it's never have been. We choose growth over profitability for many years, and I know that was painful for some of you, but in order to scale, it was the right thing for consumers and creators, and ultimately, for the business we're running today. We acquired The Echo Nest back in 2014, when most people didn't understand why a streaming company needed a machine learning AI company. That bet gave us personalization, something that's now core to everything we do. We built our ubiquity play, that's called Spotify Connect, starting in 2011, right as we launched in the U.S. At the time, every major tech platform was building their own walled garden for audio. The conventional wisdom was: Pick an ecosystem and live inside it. We bet the other way. We decided Spotify should work everywhere, in your car, your speaker, your TV, your gaming console, regardless of whose ecosystem you're in, Apple's, Google's, Amazon, Samsung, Sonos, all of them seamlessly. And today, Spotify works across more than 2,000 devices from over 200 brands, and you can start a song on your phone, and you can finish it on your TV. That doesn't happen by accident. It happens because we choose ubiquity over control, openness over lock-in, and we stuck with it for over a decade. These weren't obvious calls at the time, but they compound, and that long-term orientation will continue to guide Spotify. Which brings me to talent, because we take a long-term view there, too. At Spotify, we built a culture that tries to build and reward trust. Trust to take risks, trust to fail and learn, trust to challenge each other and share the thinking behind our decisions. Here's why that matters. Moving fast isn't just about how much you ship, it's about shipping the right things. A culture of trust gives you both. People dare to try, but they also dare to debate, to push back, to find a better path together. That's how you iterate quickly without losing direction. If there's trust, most processes are easy, allowing you to move very fast. A culture of trust is hard to replicate, and it's why we develop leaders from within. I think Alex and Gustav are great proofs of this. They've been at the center of nearly every major shift in this company: mobile, subscription, machine learning, podcast, audiobooks, marketplace, et cetera, et cetera. They didn't inherit Spotify. They really helped building it. Of course, I'm not going anywhere. I'll be here as Executive Chairman, focused on the long term, but this is their moment to lead. I have deep confidence in them, not because everything will go perfectly, of course it won't, but because I've watched them solve problems that looked impossible, and then do it again and again. They're not here to protect what I built. They're here to build what we haven't imagined yet. Their success is our success, and I'm rooting very hard for them. With that, I'm going to hand it over to Alex, Gustav, and Christian. Thank you, Daniel, and congratulations on a legendary run. Wow! Both Gustav and I thank you for the encouraging words and your trust. We closed out what we dubbed as the year of accelerated execution with another solid quarter, delivering a strong finish to 2025. In Q4, we met or exceeded guidance across all the key metrics. We marked our highest quarter ever for MAU net additions. It's just incredible to think that we now serve over three-quarters of a billion people around the world. Since going public, I have been touting the importance of our flywheel, and it all starts with MAU growth, which in turn fuels the growth of our overall business. A driver of MAU outperformance is Wrapped, which was also record-breaking this year. While we saw impressive engagement back in 2024, we also got feedback on the user experience. So this year, we turned up the dial, and the response was resounding. At the end of the campaign, more than 300 million users engaged, which was up 20%, and we saw more than 630 million shares across social media, which is up 42%. Even more, day one of Wrapped marked the highest single day of subscriber intake in Spotify history. Lots of learnings, and we take our responsibility seriously to deliver on this much-anticipated moment every year for our users. We're also driving significant business growth for creative industries, and in 2025, we paid out more than $11 billion to music rights holders. Once again, setting a global record for the highest annual payment from a single source. This takes us to nearly $70 billion since our founding. In podcasting, video podcast consumption on Spotify has increased by more than 90% since the launch of the Spotify Partner Program, or what we call SPP. There are now more than 530,000 video podcast shows on our platform. I hope you all caught the watershed moment at the Golden Globes, where Spotify and The Ringer's Good Hang with Amy Poehler won the first-ever Best Podcast award. This milestone underscores podcasting's impact on culture, and we're proud to have been a key part of it. Now, rounding things out with audiobooks, we expanded audiobooks in Premium to more markets, where we're already finding some of the world's most passionate listeners. As we continue to scale this, leading global publishers have credited us with bringing in listeners, new listeners, and driving double-digit growth in audiobooks. Now, you should expect Gustav and I to continue to optimize for and be relentless about creating value for users. Because when people spend more days in a month with us across more moments, more devices, and more verticals, it proves our product is working. It means our investments into personalization and AI are paying off. It means we're doing a great job sharing the art made by our artists, podcasters, and our authors. What this ultimately translates into is greater engagement and retention, which unlocks more revenue growth. And as our revenue grows, we bring back more value back to our partners, artists, and creators. And with scale, comes more opportunity for innovation and margin expansion. Disciplined reinvestment of this pushes growth even further. This is our formula. Rinse and repeat. As we've mentioned before, we have one of the greatest talents in the world. That's because everyone has a relationship with music, and podcasts and audiobooks, it deepens that connection even further. We proudly count 3.5% of the world as subscribers, and there's still lots of room to grow. It's not implausible to imagine us converting 10% or even 15% of the world's population to subscribers. With strong performance across all metrics, including user growth, revenue, gross margin, operating income, and cash flow, I'm confident about our position, and I'm optimistic about 2026 and beyond. We expect continued healthy MAU and subs growth throughout the year, while maintaining our consistently low churn. We will also make further progress on driving top-line growth and expanding gross margin. In closing, you might be wondering about our focus for 2026. We are framing it, we are framing it as the year of raising ambition. We were founded to solve what we felt like the, what we felt like the impossible, and ambition has been the driving force behind our success from our earliest days. And ambition will be a guiding principle of our next chapter. We are looking forward to telling you more about our, more about it at our Investor Day in May of this year. Though, what I'm certain about is that Gustav will take the opportunity to tease some of that, hopefully not giving away all of it. And, with that, I will pass it over to Gustav. Thank you, Alex. I will try to contain myself. In 2025, we launched more than 50 new features and innovations. Shout out to Prompted the Playlist, Page Match, About the Song, that all launched very recently, actually, in the last few weeks. So I think it's fair to say that we more than delivered on our bold ambitions of last year, pushing every boundary and driving engagement even higher. Now, I think it's important to zoom out, as I know there's been a lot of commentary around AI over the last few weeks, and actually last several months. Like any significant global shift, we know that there will be winners and losers, but there is no question in my mind that we will continue to be one of the big beneficiaries of AI. I'm expecting a lot of questions on AI in the Q&A, so let me share a bit more upfront. My view is that new technology is seldom disruptive on its own. Significant disruption happens when new technologies enable new asymmetric business models. For example, this is what Spotify did to music downloads. This is what Uber did to taxi service. So the question everyone should be asking is: Does this evolution create new business models, or are we mostly just seeing new technologies? For example, in SaaS, there is currently a lot of fear that the perceived business model will be challenged by more outcome-based models, which is reasonable. However, in the consumer space that we are in, we believe the dominant business model will continue to be ads plus subscription, both places where Spotify excels. This puts Spotify in an outstanding position because we already have the right business model. Our job then just becomes leveraging these new technologies to our benefit, which is something that we've done consistently for the last 18 years. Another reason that we are in a strong position is that we have been building for this moment for some time. Back in 2021, we saw the potential of AI that would be able to think and speak at the level of a human. So we acquired AI voice platform, Sonantic, in 2022, and this put us on an early path to introduce agentic experiences to Spotify users. One example of this is the widely popular interactive DJ, which we introduced in 2023 and have continued to enhance since then. About 90 million subscribers have used AI DJ so far, driving over 4 billion hours of time spent on Spotify, and this keeps growing. More recently, we also launched Prompted Playlist, a new tool that has instantly taken off with power users. So if Interactive DJ is the chat interface to Spotify, where you can talk casually, Prompted Playlist is the deep research mode of Spotify. It lets you describe and set rules for your own personalized playlists, literally writing your own algorithm. It taps into your entire Spotify listening history, reflecting not just current obsessions, but the full arc of your music taste, and integrates up-to-the-minute culture pulled from the internet. There is nothing else like it. All of this teases the next evolution of Spotify, delivering the world's most intelligent, agentic media platform, one that you can literally talk to, that fully understands each individual listener and puts them in the driver's seat. It's about moving from a passive experience to an interactive one. This is a stark contrast to most media services today. Innovation like this drives retention and time spent on Spotify, enhancing customer LTVs and monetization potential. And the momentum is undeniable. Looking at the U.S. alone, monthly streaming hours per user have grown more than 20% in the last five years, and we feel well positioned to make continued gains here. Another example of interactivity is the smashing success of our new mixing tools. We recently hit a milestone of 50 million mixed playlists, and listeners are now making more than 1 million transitions per day, building yet another unique data set that improves our experience. People don't just want to listen. They want to actively participate in the music. They want to shape it. This is now becoming possible in ways that were previously unimaginable. So on that note, there is obviously a lot of conversation around AI and music right now. So let me just share how we think about it. We see two distinct categories emerging. One, artists making original music from scratch, and two, new versions of existing music, like covers or remixes. The first category means a lot of net new music and more content than ever being delivered to Spotify. Importantly, a growing catalog has always been very good for us because it attracts new users, drives engagement, and builds fandoms. As more artists incorporate AI tools, the lines around making music are blurring. But while the music may be generated on various AI platforms, the point is that regardless of where the music is made, the cultural moment always happens on Spotify. That is where all music charts and finds an audience. This is because Spotify has long been the place that delivers both the largest reach and monetization opportunities. The second category is derivatives, new takes on existing music. Everything we see tells us listeners want to interact with their favorite music, and many artists want to let them, creating new revenue from their existing catalog. In other media, like movies and TV, existing IP is incredibly valuable. But in music, artists haven't had a real way to monetize existing catalog through AI. Because the absence of a rights framework has kept AI mostly focused on the first category, net new creation. We want to work with the industry to fix that. If you're an artist looking to unlock this potential upside, you'd want to do it on the world's leading music platform. Your fans and the largest royalty pool are already there. We have the technology and capabilities ready to unlock this in a way that is additive for both IP rights holders and Spotify. And as we've said before, we intend to do this in the right way, with artist support, not around them. In fact, many artists and industry partners see this opportunity, and we are already working with them on realizing it. With so much out there, you may be wondering if we can keep up this pace in shipping. In fact, we think we not only can, but we think we can increase it. We've been embracing and investing in this technology evolution for some time, and it's allowing us to move with much higher speed. As a concrete example, an engineer at Spotify on their morning commute from Slack on their cell phone, can tell Claude to fix a bug or add a new feature to the iOS app. And once Claude finishes that work, the engineer then gets a new version of the app, pushed to them on Slack, on their phone, so that he can then merge it to production, all before they even arrive at the office. We call this system internally Honk, and we've been told by key AI partners that our work here is industry-leading. Now, as Daniel said in his remarks, we are a tech company, and we consider ourselves the R&D department for the music industry. Our job is to understand new technologies quickly and capture their potential, which we've done time and again. The entire industry stands to benefit from this paradigm shift, but we believe that those who embrace this change and move fast will benefit the most. Now I'll pass it over to Christian to take you through the numbers. Thanks, Gustav, and thanks, everyone, for joining us. I'll cover the quarter four results and provide some perspective on our outlook. Unless otherwise noted, all reference growth metrics are presented on a year-on-year constant currency basis. Overall, we're pleased with our strong quarter four finish. Total revenue grew at an accelerated 13% to EUR 4.5 billion. Premium revenue rose 14% versus 13% last quarter, and was primarily driven by subscriber growth. Our advertising business grew 4%, flat last versus flat last quarter. On a like-for-like basis, excluding the effects of our podcast optimization strategies, we had roughly 7% advertising growth. We are encouraged by the progress we're seeing in terms of market adoption of our new advertising tools, and continue to expect improved growth in the second half of 2026. Moving to profitability, gross margin came in at 33.1%, expanding just over 80 basis points year-on-year. Our outperformance here was primarily driven by content cost favorability. Operating income of EUR 701 million was EUR 81 million above forecast, of which social charges had a positive impact of EUR 67 million due to share price movements. The remaining variance to guidance was prime, was driven by the gross margin outperformance. Finally, free cash flow was EUR 834 million in quarter four, and we ended the quarter with EUR 9.5 billion in cash and short-term investments. We repurchased $433 million dollars worth of shares in quarter four, and will continue to opportunistically return capital via share buybacks. In summary, quarter four capped off another year of healthy growth with profitability and cash flow improvement for us. On a full-year basis, 2025, revenue grew 13%, gross profit grew 20%, and operating income grew in excess of 50% to deliver a full-year margin of 13%. Our free cash flow generation improved by approximately EUR 600 million to a record EUR 2.9 billion. Looking ahead to quarter one, we are forecasting 759 million MAU, an increase of 8 million from quarter four, and 293 million subscribers. In quarter one, which is seasonally our smallest quarter, our subscriber outlook implies net addition of 3 million. This is within our historical range for quarter one. The effects of new pricing implementation in quarter one are considered in our forecast, and as Alex mentioned, the churn with respect to these price increases is in line with our expectations. In addition, we remain very encouraged by the early benefits we're seeing to our funnel, thanks to the enhanced free tier that we rolled out in late quarter three. We are well-positioned for conversion and continued healthy subscriber growth in 2026. We're also forecasting EUR 4.5 billion in total quarter one revenue, representing an improved growth rate of approximately 15% versus the 13% we just delivered in quarter four. We're forecasting ARPA growth in the 5%-6% range. Our revenue outlooks also incorporates the effects of unfavorable currency movements, which results in an incremental EUR 35 million headwind when compared to prior quarter exchange rates. We expect a quarter one gross margin of 32.8% and operating income of EUR 660 million. While we do not give full year guidance for gross margin and operating margin, we are expecting both to improve in 2026. For gross margin, we expect our recent pricing adjustments to help drive revenue growth that outpaces the net content cost growth in 2026. That said, the quarterly progression of our margins could again be variable, depending on the timing of disciplined investments in our core and monetization activities. Finally, we expect our free cash flow generation to meaningfully exceed what we generated in 2025, while reflecting progression towards a normalized long-term tax rate. In conclusion, we are confident in our path into 2026, and we'll make further progress on driving top-line growth, disciplined reinvestments, and expect improved margin and cash flow. With that, I hand it back to you, Bryan. All right. Thanks, Christian. Again, if you've got any questions, please go to Slido.com, #SpotifyEarningsQ425. We'll be reading the questions in the order they appear in the queue with respect to how people vote up their preferences. Our first question today is going to come from Jessica Reif Ehrlich on AI opportunities. Across all sectors, the market is acutely focused on AI and its impact on current business models. How is Spotify planning to use AI tools and applications for new and evolving product offers, and will this eventually lead to new tiers of service? Thank you, Jessica. This is Gustav. I'll take this, and this is a big question. I'll try to keep the answer to under 30 minutes. Just kidding. I tried to answer some of this upfront in my prepared remarks, but I want to say one additional thing. If we just zoom out and look at what is happening right now is the typical example of what is called a macro change, right? Now, Spotify has lived through many macro changes, and I think it's important to know that while many people are scared in times of change, this is when there is the most opportunity. If you look at Spotify, it was born out of a macro change, which was ubiquitous, cheap broadband. That's how we got the scale. And then this next huge wave came across us, called the smartphone. What happened? Spotify accelerated and started growing faster. Then the next macro wave came, which was called personalization. What happened? Spotify embraced it and grew even faster. Then the next thing came, which was the connected home. We all forgot about it now, but it was a big deal. What happened? Spotify started growing faster, over 2,000 integrations with hardware partners. The thing about macro change is that if you capture it, it's an opportunity, not a headwind. This is what we're focused on, and we feel very well positioned for this opportunity. As I shared in my initial remarks, the first thing to look at is: Do you even have the right business model? If you look at the AI companies, the business model is subscription and increasingly ads. That's what we excel at. So we have the right business model, and I don't see that changing for the consumer space. So we feel very positioned from a structural point of view. On top of that, as I shared, we've been investing towards this opportunity for many years now, because while it's happened faster than many people think, it was not impossible to foresee that this would happen. If you just believed in the exponential, we would get here. This is why we are leading in the market with these interactive, natural language-based services in terms of media platforms. So to be specific about what I'm excited about, I'm excited about us being the first truly intelligent agentic media service that you can literally talk to, talk to. And this is not just a pipe dream. You can already talk to Spotify through the AI DJ casually, but also through Prompt the Playlist in sort of a deep research way. We're going to keep investing in that. What that means structurally for Spotify is that we are building a data set that never existed, which is the data set of language to music, language to podcast, and language to books. We've had the song-to-song data set, but no one had the language-to-song data set. And I want to drive home a point here, which is this is a very specific data set. You may think it is a canonical data set, meaning there is a factual answer to, for example, "What is workout music?" There is no factual answer to what is workout music. In fact, it turns out that taste is not a fact, it's an opinion. So if you look at something like workout music, on average, for an American, it's usually hip hop. For a European, it's usually EDM. For many Scandinavians, it's something like heavy metal or even death metal. But then again, for a lot of Americans, millions at least, it's also death metal. So there is no canonical answer to what does workout music mean? You can't just have an LLM commoditize it as a fact, the way you can commoditize Wikipedia. You actually need to have many, many hundreds of millions of listeners across the world's market constantly telling you what it means for that specific person. This is the data set that we are building right now, that no one else is really building. It doesn't exist at this scale, and we see it improving every time we retrain our models. This is, this is what I'm excited about. I think I'll, I'll stop there, or I'll take the whole Q&A. All right, our next question is going to come from Doug Anmuth on Gross Margin. What are the drivers of Gross Margin expansion in 2026, and do they shift at all from recent years? Hey, Doug, I'll take that. Alex here, and then Christian, you may jump in. I'm confident in our Gross Margin trajectory in terms of making progress towards our long-term goals that we've talked about before. We intend to do it in a steady and sustainable manner, and the way we're really managing our Gross Margin is a balance between a couple of different things. One is thoughtful monetization. Two, we want to be disciplined with reinvestment and our cost of revenue. And of course, we're going to innovate to create even more differentiation for our platform. And if you think a bit about the last few years, and look at our trajectory, I think we've got a pretty good track record in striking this very balance. Hey, Christian here. I just want to fill in. I mean, to start with, just going back a bit to my own script, we, we do want to invest, and we will invest in, in future value when we see we have that opportunity, and, and that is what we're doing. And creating long-term value is what we're looking for every day. But, but looking at the gross margin base here in quarter four, going into quarter one, and also for next year, and the, the things that drives that, I mean, what I said was that the price increases that we have done here is, is going to outpace the net content cost in 2026. Remembering also that we are improving our ads business slowly as we go forward, and we feel that that will pick up in the second half of 2026. We have a marketplace that added both to gross income and margin in 2025. That is also a good tool for us. And finally, as we expand new verticals within the countries that we are in and also to new countries, that is also a good support for our margin development. All right, our next question is going to come from Jessica Reif Ehrlich again, this time on advertising. You've spent the last two years building out your ad tech platform. Can you provide a progress report? Where are you seeing the most progress, and where do you have more work to do? And will there be a step change in advertising growth later this year? Thanks, Jessica. You know, it's now one an a half years since we decided to re-engineer Spotify's ad stack and really move off of a rented stack. And we did this primarily to better match what our clients asked of us, the way they would like to buy on Spotify. And frankly, we did this also to meet and exceed the standards of really what is a high-performance, self-serve, and biddable stack. It was a tough call back in that moment, since it meant that... You know, I knew it meant that we had to take some pain, as this was going to be deep surgery for us. We now have. I'm happy to say that, I mean, we now have record levels of advertisers on the platform, and that increased density means much better yield, and, and as a result, more revenue growth for us. We are positive on ads. We still have work to do, but we're definitely making good progress and seeing very positive signs. Okay, and looks like one more question from Jessica, this time on, capital allocation. Christian, can you provide an update on your views on capital returns, given your extremely strong balance sheet? Thank you, Jessica. Yeah, well, it is a relevant question when we have now a good cash flow and we also have a strong balance sheet. I mean, we have said that before. Our primary goal is to reinvest in the business, and as we do that, we actually can increase our growth levels, and when we increase our growth levels, we can get more money to invest back and do that flywheel that Alex talked about in his script. That is the. You have to always remember, that is our first thought every day in this company, to grow the company. And as we've said, if we're going to have room for also returning something to the shareholders, we can do that. In 2025 duration, we did EUR 510 million in buybacks in the market. That is still an option for us also going forward, especially to cover up for dilution. In addition to that, as you know, we have EUR 1.5 billion falling due or plus in convertible note now in March, which we will settle in cash. Okay, our next question comes from Eric Sheridan on AI opportunity. Can you discuss your latest thoughts with respect to AI on, one, its role in product and platform evolution for the company; two, its effect to transform your internal processes; and three, the broader audio content creation and distribution landscape? Thank you, Eric. This is, this is Gustav. I think I touched on a lot of this in my opening remarks, but I'll, I'll summarize it briefly. In terms of its role in product development, as I said, you can actually already see that we spent a lot of last year rebuilding the company for an agentic age, so that you can launch these services, where a user can now ask Spotify a question in English that would have required you to be a senior developer at Spotify to be able to answer before. A year ago, only a very senior developer at Spotify could, could answer the question of: "What was the first track I ever listened to on Spotify? Please take the ones I listened to more than three times and match them against, what was popular at the time." Now, anyone can do that, just using English. So we've been spending time rebuilding the company for this age before. It's a little bit late to start now. You should have started about two years ago, which we did. And now you're starting to see the products on top of this roll out, and as I teased, we really want to be the world's first truly intelligent media platform. You will hear us talk more about this at the Investor Day, so I won't share many more details now, but stay tuned for that. In terms of transformation of internal processes, I did briefly share in my prepared remarks this tool called Honk, where you can, using code, literally on the bus or the train, just ask Claude to add a feature or a bug to, for example, the iOS code base. It will push a QR code back to you so that you can actually try the app with that feature. If you like it, you can merge it to production without even getting off the bus. This is speeding us up tremendously. Now, we foresee this not being the end of the line in terms of AI development, just the beginning. I'm not going to give away more secrets about how we're going to capture it, but you can be sure that we are capturing this. We're retooling the entire company for this age, and it's going to be a lot of change. But as I said before, change, if you capture it, is opportunity. Okay, our next question is going to come from Rich Greenfield on AI music. What percentage of music on Spotify today is AI-generated? How much AI-generated content is being uploaded daily, and what is your policy on the uploading of AI music? Thanks, Rich. This is Gustav again. We don't share a percentage of music uploaded on Spotify that is AI-generated, but I'll talk to you about how we think about it. The way we think about it is, from a creative point of view, Spotify should not decide what kind of tools you're allowed to use. Allowed to use an electric guitar, a synthesizer, digital audio workstation, or AI, or a more complicated question, a bit of AI, like 1% AI, 15, 20, 100? We don't think it's our decision to make. What we do think, though, is that consumers would like to know and understand what tools were used, or what, you know, in the creation of their music. So we've been working with the industry to allow them, creators and labels uploading music-... To put in the metadata, how it was created, so that we can surface this to users. And you just recently saw a feature, feature called About the Song that we launched, that literally tells you about the song, what the internet is saying. But as creators start adding this data, we can also tell the consumers how this song was made, because we think people want to know. So that's how we think about it. I also want to mention that one thing that AI can do is to accelerate the amount of spammy tracks. I want to be clear that there has always been people trying to abuse Spotify because it's a big economy, using spammy tracks. AI is a tool that could help accelerate that, but because it's been a problem for a long time, we've been investing more than anyone else in the industry to curb this problem. So for us, spammy AI music is not a new problem, it's just more scale on an existing problem that we actually feel we are leading. In general, as more content gets created with ever more advanced tools, this is a good thing for Spotify. As more content gets created and uploaded, the personalization problem becomes more important, because now there's a bigger catalog. You need to understand individual users' taste even better. So we see this development, and this is nothing new. When Spotify started, I think there were, at most, tens of millions of tracks. Now there are hundreds of millions. So the 10x explosion has already happened over the last 20 years. So this is something that we're used to. That's how we're thinking about it. Looks like, well, we've got a follow-up and a related question from Rich. Is Spotify planning to win in AI? The bear thesis on Spotify is that Udio, Suno, Klay, and Stability not only enable consumers to create AI music, but also become DSPs that take share from Spotify, with Spotify taking a more cautious approach. Any comments on that? Hey, Rich, Alex here. It's good to hear from you. So I spend a lot of time with the industry, the music industry, and with artists. And there isn't any doubt that everyone is optimistic about the future, and that AI is an important moment for all of us. And as Spotify, we provide a service to rights holders and artists and songwriters, a service to distribute and monetize their art. And the key point here, this is a scaled service with a working business model. This is where you go to put your new songs, whichever technology or instrument or tool you use to create it. And you know, I've done the rounds, and no rights holder is against our vision. We pretty much have the whole industry lined up behind us. Like Gustav mentioned before, we wanna do it in a controlled way, respecting artists and the community, and we will not do deals that aren't good for artists and ultimately Spotify. All right. Question from Justin Patterson, also related to AI music. If you could expand a bit more on Spotify's role in AI music, do you need to invest in content creation tools? And how are you helping human creators build audiences and income streams in this environment? Justin, my friend, you've heard Gustav talk about how more catalog and interactivity is good for users and also good for the industry. So he sort of partially answered your question already, but I'll, I've talked to you about how AI really enhances the value of our platform. So we have in the past, including Daniel, has talked about optimizing the Lifetime Value for our subscribers, and that is ultimately when you accumulate all of that, what builds enterprise value for Spotify. And so the question is: How does AI do that? Well, one powerful way to drive Lifetime Value is to increase retention. And, you know, the best way to increase retention is to increase engagement. And the number one reason they engage more with Spotify, and happens also to be something that drives willingness to pay, is personalization. And AI, whether it's general recommendations or reinforcement learning systems, it just takes personalization to a whole new level. And thus, you have a domino sequence of how really we enhance the value of our platform as we continue to invest in AI. AI leads to better personalization, better personalization leads to more engagement, more engagement leads to more retention, more retention leads to lifetime value, and boom, more lifetime value leads to more enterprise value. I would just add to this, to your question of, do we need to invest in content creation tools? We have all the technology and capabilities that we need since a long time. This is a tech company, so we are working with the industry to enable these opportunities. All right, our next question is going to come from Batya Levi on premium pricing. Following the recent U.S. price increases, how do you see the price to value relationship of the service relative to your competitors, and how do you expect churn to play out versus prior rounds of price increases? Thank you, Batya, one of my favorite topics. I'm really happy with the price increases we implemented back in January of this year. There have been really no surprises at all. Churn is low and came in according to our expectations. And just as a reminder, this $1 increase is the same magnitude as the U.S. price increase that we implemented back in, I think it was June of 2024. The one important thing to point out, though, is that price increases, as you know, is one of several levers we pull for growth, and when we adjust price, we do it from a position of strength. And you know this already, but I'll say it anyway, we evaluate pricing on a market-by-market basis, and we optimize for the long-term value of our platform. You've seen it in the last few years, we do not apply a one-size-fits-all approach to this. To your question, ultimately, what we strive to do is to always create more value than price. So... that happens while we're adjusting the price points as we go. This is the kind of value to price ratio we believe in. Okay, we've got another question from Rich Greenfield, this time on Spotify culture. Curious, what's changed at Spotify in the early days following Daniel stepping back from the CEO role? Well, this is Gustav. I'll take a stab at this. From one point of view, not that much has changed because we've kept growing market share and leading. But structurally, some things have changed because, first and foremost, Alex and I are two people. So we had two, two direct reporting teams, and we thought long and hard about how we were going to do that. Were we going to, to sort of split the thing down the middle, manage our own teams, have our own meetings? We decided not to. We decided to run this as a single direct reporting group. Something that we run weekly for three hours called E-team. So that changed. We focused even more on synchronization, than I think Daniel did. So we have the entire decision layer of Spotify, sort of the VP, SVP layer in this room, three hours every week, deciding and running and unblocking the entire company. There has been a shift in how we operate, and we focus even more on synchronization and planning. I want to touch on this, because in this age of AI, I think many companies are making a mistake. Maybe, maybe I shouldn't reveal this, but I will anyway. People feel like when you have AI, you don't need to plan anymore. I think it's actually going to be the opposite. When you have productivity on tap, what you need to have are very good plans so that these agents are highly utilized and stay busy. Being a company that can plan well and know what you want to do, is actually going to become more important, not less important. So I, I'll lay into that a little bit. I think, this shift really began, you know, more than two years ago. It was carefully planned, and, you know, to Gustav's point, we now not only synchronize across the company with, with all of the different teams and, and, and their leaders, but we also set targets, and we land planes that are important. We are very deliberate about how we, target, and manage the outcome that we want for, for the company and our P&L and balance sheet. And, you know, if you look at the past three years, you've seen us compound revenue growth at 17% FX neutral. We have grown gross profit by 20% on a compounded basis for three years. What's more is that we have added 18 percentage points of operating margin, and we're now generating almost EUR 3 billion for 2025 in free cash flow, which is a 17% cash margin. All of us are super happy about this run, and we are definitely in a very strong position as a team to continue to invest and grow the future of Spotify. All right, and another one on Rich Greenfield, this time about books. Can you help us understand why you want to be in the physical book-selling market? Thanks, Rich. This is Gustav. The reason that we are in the— First of all, I want to say that we're not holding inventory or anything like that in this business. The reason we want to be in the physical book market is because we think that it's not a separate market, it is the same book market. So one of the most common feedbacks we heard when we talk about audiobooks was people saying that, "Yeah, I like it, but it's not enough. I really like reading at night or in the morning. I don't want to lie and listen to my audiobook in bed, because if I fall asleep, I miss it, et cetera." So we realized that while it technically and financially looks like a different market, we tend to focus on the consumer, and from the consumer, it's the same book, whether it's a physical book, it's on their Kindle or their audiobook. So this is what drove us to... It was really the consumer that drove us to enabling this as well. So that's how we think about it. We want to do books, and that requires being in physical books as well. It doesn't really matter if the consumer bought the book themselves and then sync to the audiobook, but we want to make it super easy. If you find the book on Spotify, do not say that, "Well, I'm not going to listen to this book because I also want to read it." If that's the case, we're right there. You just click buy, it arrives in your home, and then you can sync it back and forth. So this is really a consumer-led innovation. We're still bullish on audiobooks. There's so much upside there. You saw us launch audiobooks in Premium recently in Sweden, Denmark, Finland, Iceland, and Monaco. It's still very early days, but the publishers' reactions to our entrance into the market and the audience we attract and engage have been just super positive. You heard Gustav talk about audiobook recaps, Page Match now and the partnership with Bookshop. You know, in just two years, which is a very short order, we've more than tripled our catalog to over 500,000 titles and expanded into 14 global markets, and there are so many more markets to go from here. I just want to say that we talked about raising our ambition. Now, Alex and I want to do something different. We want to build something that never existed before, rather than trying to copy something that existed. And I think books is a good example of this. We're looking at a consumer problem that no one else really looked at and said, "This needs solving." We really want Spotify to be your media partner. If that requires us syncing to your physical book or your Kindle eBook, then let's just solve that. All right, our next question is going to come from Steven Cahall on AI opportunity and priorities. With the stock down approximately a third over the last three months, the market appears to be implying Spotify will be negatively impacted from AI. What do you think the market's missing from how Spotify can benefit from AI, and what are your top priorities so you don't fall behind within this new industry landscape? Hi, Steven. Christian here. Let me start and then hand over to Gustav, but I think it's been notable, listening to today's discussion and also seeing the last quarter. Of course, that AI has been something that has been hard to grasp for many people. We don't comment on our share price, when it changes, like in this short term and so on, we will not do that going forward. But it's obvious from the recent months, but also from the discussion today, I would say, in all the questions we get, that AI is something that is interesting and will have an impact. And I think, hopefully, we have discussed and explained why this is a great opportunity for us. And as Gustav said before, we didn't start now, we started many years ago, and if you haven't, you probably will have a tougher time. And that's why we think this is a great opportunity. I hand it over to you, Gustav. I won't say that much more, but Alex here told me that the Chinese sign for macro wind is opportunity. So we're going to try to capture that opportunity. I wanna be clear, so we're going to invest, but we're going to invest with discipline when we see clear opportunities and returns. Right. Yeah, Gustav. Funny. All right, we've got a question now from Doug Anmuth on our new free tier. When should Spotify see easing headwinds to subscriber conversions from the recent free tier announcements, with a shift towards increasing conversions and subscribers? How does this impact the trajectory of both 2026 MAU and Premium subs? Well, Doug, we just came off of a really good quarter when it comes to both MAU and Premium subs, so I'm very, very encouraged about the 2026 growth of these two metrics. You know, we are seeing strong engagement uplifts, not just in our new enhanced free tier around the world, but also generally for Spotify. And this was one of the major contributors to us adding 38 million users in Q4. You know, when you fix the. It's sort of like a leaky bucket. When you start, you know, plugging the holes, the level of the water will just rise faster. And this is perhaps the most important leading indicator to growth at Spotify. It's been so in the past 15, 16 years that I've been here. If engagement goes up, it means user growth will increase, and ultimately, this has downstream impact on the overall Spotify business, including subscribers and other monetization. All right. Thanks, Doug. Another question from Justin Patterson for Gustav on AI: How is agentic coding changing product velocity? What do you believe GenAI could mean for engineer productivity and R&D investment needs? Thanks for the question, Justin. Well, I would say that I, I think it's obvious to everyone, but over Christmas, Christmas this year was an event, a singular event in terms of AI productivity. Certainly, I spent my entire vacation coding rather than being on holiday, and I think most people in tech did. A lot of things happened in December, including, Opus 4.5 coming out, with the Claude Code, and we crossed the threshold where things just started working. So a lot has actually changed very recently, and when I speak to my most senior engineers, the best developers we had, they actually say that they haven't written a single line of code since December. They actually only generate code and supervise it. It is a big change, it is real, and it's happening fast. Now, as I said, we've discussed for the last, at least one a half years, not if this should happen, but when it should happen. We've started building systems like Honk, I explained, for this type of world. I feel very well positioned to capture this. I wanna be clear, this is the beginning of the change. There is going to have to be a lot of change in these tech companies if you wanna stay competitive, and we are absolutely hell-bent on leading that change. It will be painful for many companies, because I think engineering practices, product practices, and design practices will change. And the tricky thing right now is that if this was the end of the change, you could say, this is what happened, now let's, let's, retool for this. The tricky thing is that we're in the middle of the change, so you also have to be very agile. The things you build now may be useless in a month, because it may be provided by one of the, one of the big engines, et cetera. On the other hand, it's getting so cheap to write code, so you should probably do it anyway. So, I think what it's going to mean at the end of the day is that software companies will start producing enormously more amount of software, right? If you go back to. There is this fear that software companies are not gonna exist anymore, everyone rolls their own products. I certainly don't think that's going to be true for consumer products. I think what will happen is something more like what happened with the Internet. When the Internet came along, everyone thought that we would all have our own web pages. What actually happened was there ended up being very few web pages. In times of lower friction, things actually tend to aggregate, not disaggregate. That's the opportunity we see in front of us. I think companies such as us are simply going to produce massively more software, up until our limiting factor is actually the amount of change that consumers are comfortable with. All right, we've got time for just a, a few more questions. We're gonna go now to Steven Cahall on gross margin. With premium ARPU set to accelerate for much of 2026, how should we think about premium and total margin expansion? Your Q1 margin guide already implies improvement versus the typical seasonality, so can we expect a stronger year for margin expansion than we saw in 2025? So, thank you, Steven. As you know, which I've said already, we don't give full year guidance on our Gross Margin. But you're right. I mean, we move into quarter one with an ARPA growth of 5%-6%. That's a bit faster than we have reported in quarter four, and it incorporates recently announced price increases in the market like U.S. and that will flow through our P&L for portion of the quarter and will improve a bit. But that said, we have said it repeatedly, and I will say it again, which is very important, except for that we're not guiding on full year, full year Gross Margin, is that we actually do invest when we see an opportunity for long-term value. That said, the quarterly progression of our margins could again be variable, depending on the timing of disciplined investments in our core and the monetization activities that I just mentioned. So keep that in mind, and as we say, we do believe that gross margin and operating margin will improve in 2026. All right, our last question is going to come from Batya Levi. Also related to AI opportunity. Back in October, you had announced partnership with the major labels to develop artist-first AI products. With all the hype about competition and disruption, can you talk about how you plan to differentiate with these products, and is there an urgency to launch them? This is Gustav. I'll start, and maybe Alex wants to jump in. No, we're not going to ship ideas. We're not going to ship what we're going to do in the future. That wouldn't be very good for all of you shareholders. But what I will tell you is that, as I said in my prepared remarks, we think of it in two ways: net new music and derivatives. In terms of net new music, there are tons of companies that allow you to create music using AI, but that's not where the music breaks. That music, if it breaks, breaks on Spotify, that's where it charts, that's where the cultural moment is. So we feel very comfortable about that position. A growing catalog has always been good for Spotify. Now, in terms of the derivatives, as I said, we think this is an untapped opportunity for artists to make money off of their existing IP. We have the technology and capabilities that we need, and we're very excited about it, and we are ready for the partners that are hungry to seize this opportunity. We think the ones that move first will benefit the most. So we're hungry and excited. We're not particularly stressed about it, but we're there for people who want to make money. All right. Thanks, Gustav, and thanks, Batya. That concludes our Q&A session. I'm going to turn the call over now to Alex for some concluding remarks. Thank you, Bryan. From any vantage point at Spotify, there is a lot to look forward to. In March, we'll kick off our 20th anniversary at South by Southwest, and we are excited to share more about our year of raising ambition and a longer-term vision at our Investor Day on May 21 of this year in New York. Please hold the date. Gustav, Christian, and I are looking forward to seeing you there. Right. That concludes today's call. A replay will be available on our website and also on the Spotify app under Spotify Earnings Call Replays. Thanks, everyone, for joining.

Speaker 6: Good day, and Welcome to Spotify's Fourth Quarter 2025 Earnings Call and Webcast. All participants are in a listen-only mode. If you require operator assistance at any time, please press star zero. As a reminder, this conference call is being recorded. I would now like to turn the call over to Bryan Goldberg, Head of Investor Relations. Thank you. Please go ahead. Good day, and Welcome to Spotify's Fourth Quarter 2025 Earnings Call and Webcast. good day and welcome to spotify's fourth quarter 2025 earnings call and webcast All participants are in a listen-only mode. all participants are in a listen-only mode If you require operator assistance at any time, please press star zero. if you require operator assistance at any time please press star zero As a reminder, this conference call is being recorded. as a reminder this conference call is being recorded I would now like to turn the call over to Bryan Goldberg, Head of Investor Relations. i would now like to turn the call over to bryan goldberg head of investor relations Thank you. thank you Please go ahead. please go ahead

Speaker 2: Thanks, operator, and welcome to Spotify's fourth quarter 2026 earnings conference call. Joining us today will be our founder and Executive Chairman, Daniel Ek; our Co-CEOs, Alex Norström and Gustav Söderström; and our CFO, Christian Luiga. We'll start with opening comments from the team, 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 hashtag SpotifyEarningsQ425. 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 [email protected], 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. Thanks, operator, and welcome to Spotify's fourth quarter 2026 earnings conference call. thanks operator and welcome to spotify's fourth quarter 2026 earnings conference call Joining us today will be our founder and Executive Chairman, Daniel Ek; our Co-CEOs, Alex Norström and Gustav Söderström; and our CFO, Christian Luiga. joining us today will be our founder and executive chairman daniel ek our co-ceos alex norström and gustav söderström and our cfo christian luiga We'll start with opening comments from the team, and afterwards, we'll be happy to answer your questions. we'll start with opening comments from the team 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 hashtag SpotifyEarningsQ425. questions can be submitted by going to slido.com s-l-i-d-o.com and using the code hashtag spotifyearningsq425 Analysts can ask questions directly into Slido, and all participants can then vote on the questions they find the most relevant. 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 [email protected], and we'll add in your question. if for some reason you don't have access to slido you can email investor relations at [email protected] and we'll add in your question Before we begin, let me quickly cover the Safe Harbor. 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. 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 differ materially because of factors discussed in 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. With that, I'll turn it over to Daniel. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. these statements are based on current expectations and assumptions that are subject to risks and uncertainties Actual results could differ materially because of factors discussed in today's call, in our shareholder deck, and in filings with the Securities and Exchange Commission. actual results could differ materially because of factors discussed in 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. 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. 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 With that, I'll turn it over to Daniel. with that i'll turn it over to daniel

Speaker 4: All right. Hey, everyone, and thanks for joining. As a short counting exercise has just shown me, this is my 32nd earnings call, and as you know, this was the last one that I did in the role as CEO. Alex, Gustav, and Christian will give you an overview of the business and cover the quarter, but before I hand it over, I wanted to share a few thoughts. First, I want to say gratitude to the incredible teams at Spotify, to the artists, creators, and authors we build for, the more than three-quarters of a billion people listen with us daily. Thank you, and thank you to all of you as well. I can say that I've generally valued these conversations with our investors, with analysts, and even the tough questions. All right. all right Hey, everyone, and thanks for joining. hey everyone and thanks for joining As a short counting exercise has just shown me, this is my 32nd earnings call, and as you know, this was the last one that I did in the role as CEO. as a short counting exercise has just shown me this is my 32nd earnings call and as you know this was the last one that i did in the role as ceo Alex, Gustav, and Christian will give you an overview of the business and cover the quarter, but before I hand it over, I wanted to share a few thoughts. alex gustav and christian will give you an overview of the business and cover the quarter but before i hand it over i wanted to share a few thoughts First, I want to say gratitude to the incredible teams at Spotify, to the artists, creators, and authors we build for, the more than three-quarters of a billion people listen with us daily. first i want to say gratitude to the incredible teams at spotify to the artists creators and authors we build for the more than three-quarters of a billion people listen with us daily Thank you, and thank you to all of you as well. thank you and thank you to all of you as well I can say that I've generally valued these conversations with our investors, with analysts, and even the tough questions. i can say that i've generally valued these conversations with our investors with analysts and even the tough questions Getting to build a company like this and to share that journey with people who care about where it's going, it's been a real privilege. From day one, our focus has been simple: build the best experience for listeners, be the best partner for artists and creators, and do it in a way that scales globally. That remains true almost 20 years in. For those participating on the call, I know a huge portion of your role is scoring the companies you cover. If you want a framework for evaluating Spotify going forward and what to hold us accountable to, I'd point to three key things, and then you must also layer on the culture that makes them possible. First, we solve problems at the intersection of consumers and creators. This is where we focus. Getting to build a company like this and to share that journey with people who care about where it's going, it's been a real privilege. getting to build a company like this and to share that journey with people who care about where it's going it's been a real privilege From day one, our focus has been simple: build the best experience for listeners, be the best partner for artists and creators, and do it in a way that scales globally. from day one our focus has been simple build the best experience for listeners be the best partner for artists and creators and do it in a way that scales globally That remains true almost 20 years in. that remains true almost 20 years in For those participating on the call, I know a huge portion of your role is scoring the companies you cover. for those participating on the call i know a huge portion of your role is scoring the companies you cover If you want a framework for evaluating Spotify going forward and what to hold us accountable to, I'd point to three key things, and then you must also layer on the culture that makes them possible. if you want a framework for evaluating spotify going forward and what to hold us accountable to i'd point to three key things and then you must also layer on the culture that makes them possible First, we solve problems at the intersection of consumers and creators. first we solve problems at the intersection of consumers and creators This is where we focus. this is where we focus If something is good for the consumer and also good for the creator, that's where you'll find us every time. Discover Weekly, Wrapped, Spotify for Artists, our new mobile Free tier, these aren't just features, they're proof points. We build tools that help artists reach listeners they'd never find otherwise, and in turn, help listeners discover music they didn't know they'd love. And we built an ecosystem where artists, listeners, creators, authors, and advertisers reinforce each other. That intersection is where we've always won, and it's where the next decade gets built. Second, we are first and foremost a technology company. We've said for years that we aim to be the R&D arm for the music industry. And if I may say so, nearly 20 years in, I think we've earned that. If something is good for the consumer and also good for the creator, that's where you'll find us every time. if something is good for the consumer and also good for the creator that's where you'll find us every time Discover Weekly, Wrapped, Spotify for Artists, our new mobile Free tier, these aren't just features, they're proof points. discover weekly wrapped spotify for artists our new mobile free tier these aren't just features they're proof points We build tools that help artists reach listeners they'd never find otherwise, and in turn, help listeners discover music they didn't know they'd love. we build tools that help artists reach listeners they'd never find otherwise and in turn help listeners discover music they didn't know they'd love And we built an ecosystem where artists, listeners, creators, authors, and advertisers reinforce each other. and we built an ecosystem where artists listeners creators authors and advertisers reinforce each other That intersection is where we've always won, and it's where the next decade gets built. that intersection is where we've always won and it's where the next decade gets built Second, we are first and foremost a technology company. second we are first and foremost a technology company We've said for years that we aim to be the R&D arm for the music industry. we've said for years that we aim to be the r&d arm for the music industry And if I may say so, nearly 20 years in, I think we've earned that. and if i may say so nearly 20 years in i think we've earned that We drove the ship from downloads to streaming and subscription, and we proved the model could work at scale. But here's what excites me the most. Our capabilities now extend far beyond music. Today, what we built is a technology platform for audio and increasingly for all the ways creators connect with audiences, and this identity will matter even more going forward. The next wave of technology shifts, AI, new interfaces, wearables, new ways of interacting with content, these will reshape how people discover and experience audio and media. The hard problems ahead in music and podcast and books and video, in live, and in things we haven't even built yet, we're going to keep building the technology to solve them. Third, we play the long game. When we went public in 2018, I talked about long-term value creation. We drove the ship from downloads to streaming and subscription, and we proved the model could work at scale. we drove the ship from downloads to streaming and subscription and we proved the model could work at scale But here's what excites me the most. but here's what excites me the most Our capabilities now extend far beyond music. our capabilities now extend far beyond music Today, what we built is a technology platform for audio and increasingly for all the ways creators connect with audiences, and this identity will matter even more going forward. today what we built is a technology platform for audio and increasingly for all the ways creators connect with audiences and this identity will matter even more going forward The next wave of technology shifts, AI, new interfaces, wearables, new ways of interacting with content, these will reshape how people discover and experience audio and media. the next wave of technology shifts ai new interfaces wearables new ways of interacting with content these will reshape how people discover and experience audio and media The hard problems ahead in music and podcast and books and video, in live, and in things we haven't even built yet, we're going to keep building the technology to solve them. the hard problems ahead in music and podcast and books and video in live and in things we haven't even built yet we're going to keep building the technology to solve them Third, we play the long game. third we play the long game When we went public in 2018, I talked about long-term value creation. when we went public in 2018 i talked about long-term value creation While I know many of you focus quarter to quarter, that's not how we grade ourselves, and it's never have been. We choose growth over profitability for many years, and I know that was painful for some of you, but in order to scale, it was the right thing for consumers and creators, and ultimately, for the business we're running today. We acquired The Echo Nest back in 2014, when most people didn't understand why a streaming company needed a machine learning AI company. That bet gave us personalization, something that's now core to everything we do. We built our ubiquity play, that's called Spotify Connect, starting in 2011, right as we launched in the U.S. At the time, every major tech platform was building their own walled garden for audio. The conventional wisdom was: Pick an ecosystem and live inside it. We bet the other way. While I know many of you focus quarter to quarter, that's not how we grade ourselves, and it's never have been. while i know many of you focus quarter to quarter that's not how we grade ourselves and it's never have been We choose growth over profitability for many years, and I know that was painful for some of you, but in order to scale, it was the right thing for consumers and creators, and ultimately, for the business we're running today. we choose growth over profitability for many years and i know that was painful for some of you but in order to scale it was the right thing for consumers and creators and ultimately for the business we're running today We acquired The Echo Nest back in 2014, when most people didn't understand why a streaming company needed a machine learning AI company. we acquired the echo nest back in 2014 when most people didn't understand why a streaming company needed a machine learning ai company That bet gave us personalization, something that's now core to everything we do. that bet gave us personalization something that's now core to everything we do We built our ubiquity play, that's called Spotify Connect, starting in 2011, right as we launched in the U.S. we built our ubiquity play that's called spotify connect starting in 2011 right as we launched in the u.s At the time, every major tech platform was building their own walled garden for audio. at the time every major tech platform was building their own walled garden for audio The conventional wisdom was: Pick an ecosystem and live inside it. the conventional wisdom was pick an ecosystem and live inside it We bet the other way. we bet the other way We decided Spotify should work everywhere, in your car, your speaker, your TV, your gaming console, regardless of whose ecosystem you're in, Apple's, Google's, Amazon, Samsung, Sonos, all of them seamlessly. And today, Spotify works across more than 2,000 devices from over 200 brands, and you can start a song on your phone, and you can finish it on your TV. That doesn't happen by accident. It happens because we choose ubiquity over control, openness over lock-in, and we stuck with it for over a decade. These weren't obvious calls at the time, but they compound, and that long-term orientation will continue to guide Spotify. Which brings me to talent, because we take a long-term view there, too. At Spotify, we built a culture that tries to build and reward trust. We decided Spotify should work everywhere, in your car, your speaker, your TV, your gaming console, regardless of whose ecosystem you're in, Apple's, Google's, Amazon, Samsung, Sonos, all of them seamlessly. we decided spotify should work everywhere in your car your speaker your tv your gaming console regardless of whose ecosystem you're in apple's google's amazon samsung sonos all of them seamlessly And today, Spotify works across more than 2,000 devices from over 200 brands, and you can start a song on your phone, and you can finish it on your TV. and today spotify works across more than 2,000 devices from over 200 brands and you can start a song on your phone and you can finish it on your tv That doesn't happen by accident. that doesn't happen by accident It happens because we choose ubiquity over control, openness over lock-in, and we stuck with it for over a decade. it happens because we choose ubiquity over control openness over lock-in and we stuck with it for over a decade These weren't obvious calls at the time, but they compound, and that long-term orientation will continue to guide Spotify. these weren't obvious calls at the time but they compound and that long-term orientation will continue to guide spotify Which brings me to talent, because we take a long-term view there, too. which brings me to talent because we take a long-term view there too At Spotify, we built a culture that tries to build and reward trust. at spotify we built a culture that tries to build and reward trust Trust to take risks, trust to fail and learn, trust to challenge each other and share the thinking behind our decisions. Here's why that matters. Moving fast isn't just about how much you ship, it's about shipping the right things. A culture of trust gives you both. People dare to try, but they also dare to debate, to push back, to find a better path together. That's how you iterate quickly without losing direction. If there's trust, most processes are easy, allowing you to move very fast. A culture of trust is hard to replicate, and it's why we develop leaders from within. I think Alex and Gustav are great proofs of this. They've been at the center of nearly every major shift in this company: mobile, subscription, machine learning, podcast, audiobooks, marketplace, et cetera, et cetera. They didn't inherit Spotify. They really helped building it. Trust to take risks, trust to fail and learn, trust to challenge each other and share the thinking behind our decisions. trust to take risks trust to fail and learn trust to challenge each other and share the thinking behind our decisions Here's why that matters. here's why that matters Moving fast isn't just about how much you ship, it's about shipping the right things. moving fast isn't just about how much you ship it's about shipping the right things A culture of trust gives you both. a culture of trust gives you both People dare to try, but they also dare to debate, to push back, to find a better path together. people dare to try but they also dare to debate to push back to find a better path together That's how you iterate quickly without losing direction. that's how you iterate quickly without losing direction If there's trust, most processes are easy, allowing you to move very fast. if there's trust most processes are easy allowing you to move very fast A culture of trust is hard to replicate, and it's why we develop leaders from within. a culture of trust is hard to replicate and it's why we develop leaders from within I think Alex and Gustav are great proofs of this. i think alex and gustav are great proofs of this They've been at the center of nearly every major shift in this company: mobile, subscription, machine learning, podcast, audiobooks, marketplace, et cetera, et cetera. they've been at the center of nearly every major shift in this company mobile subscription machine learning podcast audiobooks marketplace et cetera et cetera They didn't inherit Spotify. they didn't inherit spotify They really helped building it. they really helped building it Of course, I'm not going anywhere. I'll be here as Executive Chairman, focused on the long term, but this is their moment to lead. I have deep confidence in them, not because everything will go perfectly, of course it won't, but because I've watched them solve problems that looked impossible, and then do it again and again. They're not here to protect what I built. They're here to build what we haven't imagined yet. Their success is our success, and I'm rooting very hard for them. With that, I'm going to hand it over to Alex, Gustav, and Christian. Of course, I'm not going anywhere. of course i'm not going anywhere I'll be here as Executive Chairman, focused on the long term, but this is their moment to lead. i'll be here as executive chairman focused on the long term but this is their moment to lead I have deep confidence in them, not because everything will go perfectly, of course it won't, but because I've watched them solve problems that looked impossible, and then do it again and again. i have deep confidence in them not because everything will go perfectly of course it won't but because i've watched them solve problems that looked impossible and then do it again and again They're not here to protect what I built. they're not here to protect what i built They're here to build what we haven't imagined yet. they're here to build what we haven't imagined yet Their success is our success, and I'm rooting very hard for them. their success is our success and i'm rooting very hard for them With that, I'm going to hand it over to Alex, Gustav, and Christian. with that i'm going to hand it over to alex gustav and christian

Speaker 1: Thank you, Daniel, and congratulations on a legendary run. Wow! Both Gustav and I thank you for the encouraging words and your trust. We closed out what we dubbed as the year of accelerated execution with another solid quarter, delivering a strong finish to 2025. In Q4, we met or exceeded guidance across all the key metrics. We marked our highest quarter ever for MAU net additions. It's just incredible to think that we now serve over three-quarters of a billion people around the world. Since going public, I have been touting the importance of our flywheel, and it all starts with MAU growth, which in turn fuels the growth of our overall business. A driver of MAU outperformance is Wrapped, which was also record-breaking this year. Thank you, Daniel, and congratulations on a legendary run. thank you daniel and congratulations on a legendary run Wow! wow Both Gustav and I thank you for the encouraging words and your trust. both gustav and i thank you for the encouraging words and your trust We closed out what we dubbed as the year of accelerated execution with another solid quarter, delivering a strong finish to 2025. we closed out what we dubbed as the year of accelerated execution with another solid quarter delivering a strong finish to 2025 In Q4, we met or exceeded guidance across all the key metrics. in q4 we met or exceeded guidance across all the key metrics We marked our highest quarter ever for MAU net additions. we marked our highest quarter ever for mau net additions It's just incredible to think that we now serve over three-quarters of a billion people around the world. it's just incredible to think that we now serve over three-quarters of a billion people around the world Since going public, I have been touting the importance of our flywheel, and it all starts with MAU growth, which in turn fuels the growth of our overall business. since going public i have been touting the importance of our flywheel and it all starts with mau growth which in turn fuels the growth of our overall business A driver of MAU outperformance is Wrapped, which was also record-breaking this year. a driver of mau outperformance is wrapped which was also record-breaking this year While we saw impressive engagement back in 2024, we also got feedback on the user experience. So this year, we turned up the dial, and the response was resounding. At the end of the campaign, more than 300 million users engaged, which was up 20%, and we saw more than 630 million shares across social media, which is up 42%. Even more, day one of Wrapped marked the highest single day of subscriber intake in Spotify history. Lots of learnings, and we take our responsibility seriously to deliver on this much-anticipated moment every year for our users. We're also driving significant business growth for creative industries, and in 2025, we paid out more than $11 billion to music rights holders. Once again, setting a global record for the highest annual payment from a single source. While we saw impressive engagement back in 2024, we also got feedback on the user experience. while we saw impressive engagement back in 2024 we also got feedback on the user experience So this year, we turned up the dial, and the response was resounding. so this year we turned up the dial and the response was resounding At the end of the campaign, more than 300 million users engaged, which was up 20%, and we saw more than 630 million shares across social media, which is up 42%. at the end of the campaign more than 300 million users engaged which was up 20% and we saw more than 630 million shares across social media which is up 42% Even more, day one of Wrapped marked the highest single day of subscriber intake in Spotify history. even more day one of wrapped marked the highest single day of subscriber intake in spotify history Lots of learnings, and we take our responsibility seriously to deliver on this much-anticipated moment every year for our users. lots of learnings and we take our responsibility seriously to deliver on this much-anticipated moment every year for our users We're also driving significant business growth for creative industries, and in 2025, we paid out more than $11 billion to music rights holders. we're also driving significant business growth for creative industries and in 2025 we paid out more than $11 billion to music rights holders Once again, setting a global record for the highest annual payment from a single source. once again setting a global record for the highest annual payment from a single source This takes us to nearly $70 billion since our founding. In podcasting, video podcast consumption on Spotify has increased by more than 90% since the launch of the Spotify Partner Program, or what we call SPP. There are now more than 530,000 video podcast shows on our platform. I hope you all caught the watershed moment at the Golden Globes, where Spotify and The Ringer's Good Hang with Amy Poehler won the first-ever Best Podcast award. This milestone underscores podcasting's impact on culture, and we're proud to have been a key part of it. Now, rounding things out with audiobooks, we expanded audiobooks in Premium to more markets, where we're already finding some of the world's most passionate listeners. This takes us to nearly $70 billion since our founding. this takes us to nearly $70 billion since our founding In podcasting, video podcast consumption on Spotify has increased by more than 90% since the launch of the Spotify Partner Program, or what we call SPP. in podcasting video podcast consumption on spotify has increased by more than 90% since the launch of the spotify partner program or what we call spp There are now more than 530,000 video podcast shows on our platform. there are now more than 530,000 video podcast shows on our platform I hope you all caught the watershed moment at the Golden Globes, where Spotify and The Ringer's Good Hang with Amy Poehler won the first-ever Best Podcast award. i hope you all caught the watershed moment at the golden globes where spotify and the ringer's good hang with amy poehler won the first-ever best podcast award This milestone underscores podcasting's impact on culture, and we're proud to have been a key part of it. this milestone underscores podcasting's impact on culture and we're proud to have been a key part of it Now, rounding things out with audiobooks, we expanded audiobooks in Premium to more markets, where we're already finding some of the world's most passionate listeners. now rounding things out with audiobooks we expanded audiobooks in premium to more markets where we're already finding some of the world's most passionate listeners As we continue to scale this, leading global publishers have credited us with bringing in listeners, new listeners, and driving double-digit growth in audiobooks. Now, you should expect Gustav and I to continue to optimize for and be relentless about creating value for users. Because when people spend more days in a month with us across more moments, more devices, and more verticals, it proves our product is working. It means our investments into personalization and AI are paying off. It means we're doing a great job sharing the art made by our artists, podcasters, and our authors. What this ultimately translates into is greater engagement and retention, which unlocks more revenue growth. And as our revenue grows, we bring back more value back to our partners, artists, and creators. And with scale, comes more opportunity for innovation and margin expansion. Disciplined reinvestment of this pushes growth even further. As we continue to scale this, leading global publishers have credited us with bringing in listeners, new listeners, and driving double-digit growth in audiobooks. as we continue to scale this leading global publishers have credited us with bringing in listeners new listeners and driving double-digit growth in audiobooks Now, you should expect Gustav and I to continue to optimize for and be relentless about creating value for users. now you should expect gustav and i to continue to optimize for and be relentless about creating value for users Because when people spend more days in a month with us across more moments, more devices, and more verticals, it proves our product is working. because when people spend more days in a month with us across more moments more devices and more verticals it proves our product is working It means our investments into personalization and AI are paying off. it means our investments into personalization and ai are paying off It means we're doing a great job sharing the art made by our artists, podcasters, and our authors. it means we're doing a great job sharing the art made by our artists podcasters and our authors What this ultimately translates into is greater engagement and retention, which unlocks more revenue growth. what this ultimately translates into is greater engagement and retention which unlocks more revenue growth And as our revenue grows, we bring back more value back to our partners, artists, and creators. and as our revenue grows we bring back more value back to our partners artists and creators And with scale, comes more opportunity for innovation and margin expansion. and with scale comes more opportunity for innovation and margin expansion Disciplined reinvestment of this pushes growth even further. disciplined reinvestment of this pushes growth even further This is our formula. Rinse and repeat. As we've mentioned before, we have one of the greatest talents in the world. That's because everyone has a relationship with music, and podcasts and audiobooks, it deepens that connection even further. We proudly count 3.5% of the world as subscribers, and there's still lots of room to grow. It's not implausible to imagine us converting 10% or even 15% of the world's population to subscribers. With strong performance across all metrics, including user growth, revenue, gross margin, operating income, and cash flow, I'm confident about our position, and I'm optimistic about 2026 and beyond. We expect continued healthy MAU and subs growth throughout the year, while maintaining our consistently low churn. We will also make further progress on driving top-line growth and expanding gross margin. This is our formula. this is our formula Rinse and repeat. rinse and repeat As we've mentioned before, we have one of the greatest talents in the world. as we've mentioned before we have one of the greatest talents in the world That's because everyone has a relationship with music, and podcasts and audiobooks, it deepens that connection even further. that's because everyone has a relationship with music and podcasts and audiobooks it deepens that connection even further We proudly count 3.5% of the world as subscribers, and there's still lots of room to grow. we proudly count 3.5% of the world as subscribers and there's still lots of room to grow It's not implausible to imagine us converting 10% or even 15% of the world's population to subscribers. it's not implausible to imagine us converting 10% or even 15% of the world's population to subscribers With strong performance across all metrics, including user growth, revenue, gross margin, operating income, and cash flow, I'm confident about our position, and I'm optimistic about 2026 and beyond. with strong performance across all metrics including user growth revenue gross margin operating income and cash flow i'm confident about our position and i'm optimistic about 2026 and beyond We expect continued healthy MAU and subs growth throughout the year, while maintaining our consistently low churn. we expect continued healthy mau and subs growth throughout the year while maintaining our consistently low churn We will also make further progress on driving top-line growth and expanding gross margin. we will also make further progress on driving top-line growth and expanding gross margin In closing, you might be wondering about our focus for 2026. We are framing it, we are framing it as the year of raising ambition. We were founded to solve what we felt like the, what we felt like the impossible, and ambition has been the driving force behind our success from our earliest days. And ambition will be a guiding principle of our next chapter. We are looking forward to telling you more about our, more about it at our Investor Day in May of this year. Though, what I'm certain about is that Gustav will take the opportunity to tease some of that, hopefully not giving away all of it. And, with that, I will pass it over to Gustav. In closing, you might be wondering about our focus for 2026. in closing you might be wondering about our focus for 2026 We are framing it, we are framing it as the year of raising ambition. we are framing it we are framing it as the year of raising ambition We were founded to solve what we felt like the, what we felt like the impossible, and ambition has been the driving force behind our success from our earliest days. we were founded to solve what we felt like the what we felt like the impossible and ambition has been the driving force behind our success from our earliest days And ambition will be a guiding principle of our next chapter. and ambition will be a guiding principle of our next chapter We are looking forward to telling you more about our, more about it at our Investor Day in May of this year. we are looking forward to telling you more about our more about it at our investor day in may of this year Though, what I'm certain about is that Gustav will take the opportunity to tease some of that, hopefully not giving away all of it. though what i'm certain about is that gustav will take the opportunity to tease some of that hopefully not giving away all of it And, with that, I will pass it over to Gustav. and with that i will pass it over to gustav

Speaker 5: Thank you, Alex. I will try to contain myself. In 2025, we launched more than 50 new features and innovations. Shout out to Prompted the Playlist, Page Match, About the Song, that all launched very recently, actually, in the last few weeks. So I think it's fair to say that we more than delivered on our bold ambitions of last year, pushing every boundary and driving engagement even higher. Now, I think it's important to zoom out, as I know there's been a lot of commentary around AI over the last few weeks, and actually last several months. Like any significant global shift, we know that there will be winners and losers, but there is no question in my mind that we will continue to be one of the big beneficiaries of AI. Thank you, Alex. thank you alex I will try to contain myself. i will try to contain myself In 2025, we launched more than 50 new features and innovations. in 2025 we launched more than 50 new features and innovations Shout out to Prompted the Playlist, Page Match, About the Song, that all launched very recently, actually, in the last few weeks. shout out to prompted the playlist page match about the song that all launched very recently actually in the last few weeks So I think it's fair to say that we more than delivered on our bold ambitions of last year, pushing every boundary and driving engagement even higher. so i think it's fair to say that we more than delivered on our bold ambitions of last year pushing every boundary and driving engagement even higher Now, I think it's important to zoom out, as I know there's been a lot of commentary around AI over the last few weeks, and actually last several months. now i think it's important to zoom out as i know there's been a lot of commentary around ai over the last few weeks and actually last several months Like any significant global shift, we know that there will be winners and losers, but there is no question in my mind that we will continue to be one of the big beneficiaries of AI. like any significant global shift we know that there will be winners and losers but there is no question in my mind that we will continue to be one of the big beneficiaries of ai I'm expecting a lot of questions on AI in the Q&A, so let me share a bit more upfront. My view is that new technology is seldom disruptive on its own. Significant disruption happens when new technologies enable new asymmetric business models. For example, this is what Spotify did to music downloads. This is what Uber did to taxi service. So the question everyone should be asking is: Does this evolution create new business models, or are we mostly just seeing new technologies? For example, in SaaS, there is currently a lot of fear that the perceived business model will be challenged by more outcome-based models, which is reasonable. However, in the consumer space that we are in, we believe the dominant business model will continue to be ads plus subscription, both places where Spotify excels. I'm expecting a lot of questions on AI in the Q&A, so let me share a bit more upfront. i'm expecting a lot of questions on ai in the q&a so let me share a bit more upfront My view is that new technology is seldom disruptive on its own. my view is that new technology is seldom disruptive on its own Significant disruption happens when new technologies enable new asymmetric business models. significant disruption happens when new technologies enable new asymmetric business models For example, this is what Spotify did to music downloads. for example this is what spotify did to music downloads This is what Uber did to taxi service. this is what uber did to taxi service So the question everyone should be asking is: Does this evolution create new business models, or are we mostly just seeing new technologies? so the question everyone should be asking is does this evolution create new business models or are we mostly just seeing new technologies For example, in SaaS, there is currently a lot of fear that the perceived business model will be challenged by more outcome-based models, which is reasonable. for example in saas there is currently a lot of fear that the perceived business model will be challenged by more outcome-based models which is reasonable However, in the consumer space that we are in, we believe the dominant business model will continue to be ads plus subscription, both places where Spotify excels. however in the consumer space that we are in we believe the dominant business model will continue to be ads plus subscription both places where spotify excels This puts Spotify in an outstanding position because we already have the right business model. Our job then just becomes leveraging these new technologies to our benefit, which is something that we've done consistently for the last 18 years. Another reason that we are in a strong position is that we have been building for this moment for some time. Back in 2021, we saw the potential of AI that would be able to think and speak at the level of a human. So we acquired AI voice platform, Sonantic, in 2022, and this put us on an early path to introduce agentic experiences to Spotify users. One example of this is the widely popular interactive DJ, which we introduced in 2023 and have continued to enhance since then. This puts Spotify in an outstanding position because we already have the right business model. this puts spotify in an outstanding position because we already have the right business model Our job then just becomes leveraging these new technologies to our benefit, which is something that we've done consistently for the last 18 years. our job then just becomes leveraging these new technologies to our benefit which is something that we've done consistently for the last 18 years Another reason that we are in a strong position is that we have been building for this moment for some time. another reason that we are in a strong position is that we have been building for this moment for some time Back in 2021, we saw the potential of AI that would be able to think and speak at the level of a human. back in 2021 we saw the potential of ai that would be able to think and speak at the level of a human So we acquired AI voice platform, Sonantic, in 2022, and this put us on an early path to introduce agentic experiences to Spotify users. so we acquired ai voice platform sonantic in 2022 and this put us on an early path to introduce agentic experiences to spotify users One example of this is the widely popular interactive DJ, which we introduced in 2023 and have continued to enhance since then. one example of this is the widely popular interactive dj which we introduced in 2023 and have continued to enhance since then About 90 million subscribers have used AI DJ so far, driving over 4 billion hours of time spent on Spotify, and this keeps growing. More recently, we also launched Prompted Playlist, a new tool that has instantly taken off with power users. So if Interactive DJ is the chat interface to Spotify, where you can talk casually, Prompted Playlist is the deep research mode of Spotify. It lets you describe and set rules for your own personalized playlists, literally writing your own algorithm. It taps into your entire Spotify listening history, reflecting not just current obsessions, but the full arc of your music taste, and integrates up-to-the-minute culture pulled from the internet. There is nothing else like it. About 90 million subscribers have used AI DJ so far, driving over 4 billion hours of time spent on Spotify, and this keeps growing. about 90 million subscribers have used ai dj so far driving over 4 billion hours of time spent on spotify and this keeps growing More recently, we also launched Prompted Playlist, a new tool that has instantly taken off with power users. more recently we also launched prompted playlist a new tool that has instantly taken off with power users So if Interactive DJ is the chat interface to Spotify, where you can talk casually, Prompted Playlist is the deep research mode of Spotify. so if interactive dj is the chat interface to spotify where you can talk casually prompted playlist is the deep research mode of spotify It lets you describe and set rules for your own personalized playlists, literally writing your own algorithm. it lets you describe and set rules for your own personalized playlists literally writing your own algorithm It taps into your entire Spotify listening history, reflecting not just current obsessions, but the full arc of your music taste, and integrates up-to-the-minute culture pulled from the internet. it taps into your entire spotify listening history reflecting not just current obsessions but the full arc of your music taste and integrates up-to-the-minute culture pulled from the internet There is nothing else like it. there is nothing else like it All of this teases the next evolution of Spotify, delivering the world's most intelligent, agentic media platform, one that you can literally talk to, that fully understands each individual listener and puts them in the driver's seat. It's about moving from a passive experience to an interactive one. This is a stark contrast to most media services today. Innovation like this drives retention and time spent on Spotify, enhancing customer LTVs and monetization potential. And the momentum is undeniable. Looking at the U.S. alone, monthly streaming hours per user have grown more than 20% in the last five years, and we feel well positioned to make continued gains here. Another example of interactivity is the smashing success of our new mixing tools. All of this teases the next evolution of Spotify, delivering the world's most intelligent, agentic media platform, one that you can literally talk to, that fully understands each individual listener and puts them in the driver's seat. all of this teases the next evolution of spotify delivering the world's most intelligent agentic media platform one that you can literally talk to that fully understands each individual listener and puts them in the driver's seat It's about moving from a passive experience to an interactive one. it's about moving from a passive experience to an interactive one This is a stark contrast to most media services today. this is a stark contrast to most media services today Innovation like this drives retention and time spent on Spotify, enhancing customer LTVs and monetization potential. innovation like this drives retention and time spent on spotify enhancing customer ltvs and monetization potential And the momentum is undeniable. and the momentum is undeniable Looking at the U.S. alone, monthly streaming hours per user have grown more than 20% in the last five years, and we feel well positioned to make continued gains here. looking at the u.s alone monthly streaming hours per user have grown more than 20% in the last five years and we feel well positioned to make continued gains here Another example of interactivity is the smashing success of our new mixing tools. another example of interactivity is the smashing success of our new mixing tools We recently hit a milestone of 50 million mixed playlists, and listeners are now making more than 1 million transitions per day, building yet another unique data set that improves our experience. People don't just want to listen. They want to actively participate in the music. They want to shape it. This is now becoming possible in ways that were previously unimaginable. So on that note, there is obviously a lot of conversation around AI and music right now. So let me just share how we think about it. We see two distinct categories emerging. One, artists making original music from scratch, and two, new versions of existing music, like covers or remixes. The first category means a lot of net new music and more content than ever being delivered to Spotify. We recently hit a milestone of 50 million mixed playlists, and listeners are now making more than 1 million transitions per day, building yet another unique data set that improves our experience. we recently hit a milestone of 50 million mixed playlists and listeners are now making more than 1 million transitions per day building yet another unique data set that improves our experience People don't just want to listen. people don't just want to listen They want to actively participate in the music. they want to actively participate in the music They want to shape it. they want to shape it This is now becoming possible in ways that were previously unimaginable. this is now becoming possible in ways that were previously unimaginable So on that note, there is obviously a lot of conversation around AI and music right now. so on that note there is obviously a lot of conversation around ai and music right now So let me just share how we think about it. so let me just share how we think about it We see two distinct categories emerging. we see two distinct categories emerging One, artists making original music from scratch, and two, new versions of existing music, like covers or remixes. one artists making original music from scratch and two new versions of existing music like covers or remixes The first category means a lot of net new music and more content than ever being delivered to Spotify. the first category means a lot of net new music and more content than ever being delivered to spotify Importantly, a growing catalog has always been very good for us because it attracts new users, drives engagement, and builds fandoms. As more artists incorporate AI tools, the lines around making music are blurring. But while the music may be generated on various AI platforms, the point is that regardless of where the music is made, the cultural moment always happens on Spotify. That is where all music charts and finds an audience. This is because Spotify has long been the place that delivers both the largest reach and monetization opportunities. The second category is derivatives, new takes on existing music. Everything we see tells us listeners want to interact with their favorite music, and many artists want to let them, creating new revenue from their existing catalog. In other media, like movies and TV, existing IP is incredibly valuable. Importantly, a growing catalog has always been very good for us because it attracts new users, drives engagement, and builds fandoms. importantly a growing catalog has always been very good for us because it attracts new users drives engagement and builds fandoms As more artists incorporate AI tools, the lines around making music are blurring. as more artists incorporate ai tools the lines around making music are blurring But while the music may be generated on various AI platforms, the point is that regardless of where the music is made, the cultural moment always happens on Spotify. but while the music may be generated on various ai platforms the point is that regardless of where the music is made the cultural moment always happens on spotify That is where all music charts and finds an audience. that is where all music charts and finds an audience This is because Spotify has long been the place that delivers both the largest reach and monetization opportunities. this is because spotify has long been the place that delivers both the largest reach and monetization opportunities The second category is derivatives, new takes on existing music. the second category is derivatives new takes on existing music Everything we see tells us listeners want to interact with their favorite music, and many artists want to let them, creating new revenue from their existing catalog. everything we see tells us listeners want to interact with their favorite music and many artists want to let them creating new revenue from their existing catalog In other media, like movies and TV, existing IP is incredibly valuable. in other media like movies and tv existing ip is incredibly valuable But in music, artists haven't had a real way to monetize existing catalog through AI. Because the absence of a rights framework has kept AI mostly focused on the first category, net new creation. We want to work with the industry to fix that. If you're an artist looking to unlock this potential upside, you'd want to do it on the world's leading music platform. Your fans and the largest royalty pool are already there. We have the technology and capabilities ready to unlock this in a way that is additive for both IP rights holders and Spotify. And as we've said before, we intend to do this in the right way, with artist support, not around them. In fact, many artists and industry partners see this opportunity, and we are already working with them on realizing it. But in music, artists haven't had a real way to monetize existing catalog through AI. but in music artists haven't had a real way to monetize existing catalog through ai Because the absence of a rights framework has kept AI mostly focused on the first category, net new creation. because the absence of a rights framework has kept ai mostly focused on the first category net new creation We want to work with the industry to fix that. we want to work with the industry to fix that If you're an artist looking to unlock this potential upside, you'd want to do it on the world's leading music platform. if you're an artist looking to unlock this potential upside you'd want to do it on the world's leading music platform Your fans and the largest royalty pool are already there. your fans and the largest royalty pool are already there We have the technology and capabilities ready to unlock this in a way that is additive for both IP rights holders and Spotify. we have the technology and capabilities ready to unlock this in a way that is additive for both ip rights holders and spotify And as we've said before, we intend to do this in the right way, with artist support, not around them. and as we've said before we intend to do this in the right way with artist support not around them In fact, many artists and industry partners see this opportunity, and we are already working with them on realizing it. in fact many artists and industry partners see this opportunity and we are already working with them on realizing it With so much out there, you may be wondering if we can keep up this pace in shipping. In fact, we think we not only can, but we think we can increase it. We've been embracing and investing in this technology evolution for some time, and it's allowing us to move with much higher speed. As a concrete example, an engineer at Spotify on their morning commute from Slack on their cell phone, can tell Claude to fix a bug or add a new feature to the iOS app. And once Claude finishes that work, the engineer then gets a new version of the app, pushed to them on Slack, on their phone, so that he can then merge it to production, all before they even arrive at the office. We call this system internally Honk, and we've been told by key AI partners that our work here is industry-leading. With so much out there, you may be wondering if we can keep up this pace in shipping. with so much out there you may be wondering if we can keep up this pace in shipping In fact, we think we not only can, but we think we can increase it. in fact we think we not only can but we think we can increase it We've been embracing and investing in this technology evolution for some time, and it's allowing us to move with much higher speed. we've been embracing and investing in this technology evolution for some time and it's allowing us to move with much higher speed As a concrete example, an engineer at Spotify on their morning commute from Slack on their cell phone, can tell Claude to fix a bug or add a new feature to the iOS app. as a concrete example an engineer at spotify on their morning commute from slack on their cell phone can tell claude to fix a bug or add a new feature to the ios app And once Claude finishes that work, the engineer then gets a new version of the app, pushed to them on Slack, on their phone, so that he can then merge it to production, all before they even arrive at the office. and once claude finishes that work the engineer then gets a new version of the app pushed to them on slack on their phone so that he can then merge it to production all before they even arrive at the office We call this system internally Honk, and we've been told by key AI partners that our work here is industry-leading. we call this system internally honk and we've been told by key ai partners that our work here is industry-leading Now, as Daniel said in his remarks, we are a tech company, and we consider ourselves the R&D department for the music industry. Our job is to understand new technologies quickly and capture their potential, which we've done time and again. The entire industry stands to benefit from this paradigm shift, but we believe that those who embrace this change and move fast will benefit the most. Now I'll pass it over to Christian to take you through the numbers. Now, as Daniel said in his remarks, we are a tech company, and we consider ourselves the R&D department for the music industry. now as daniel said in his remarks we are a tech company and we consider ourselves the r&d department for the music industry Our job is to understand new technologies quickly and capture their potential, which we've done time and again. our job is to understand new technologies quickly and capture their potential which we've done time and again The entire industry stands to benefit from this paradigm shift, but we believe that those who embrace this change and move fast will benefit the most. the entire industry stands to benefit from this paradigm shift but we believe that those who embrace this change and move fast will benefit the most Now I'll pass it over to Christian to take you through the numbers. now i'll pass it over to christian to take you through the numbers

Speaker 3: Thanks, Gustav, and thanks, everyone, for joining us. I'll cover the quarter four results and provide some perspective on our outlook. Unless otherwise noted, all reference growth metrics are presented on a year-on-year constant currency basis. Overall, we're pleased with our strong quarter four finish. Total revenue grew at an accelerated 13% to EUR 4.5 billion. Premium revenue rose 14% versus 13% last quarter, and was primarily driven by subscriber growth. Our advertising business grew 4%, flat last versus flat last quarter. On a like-for-like basis, excluding the effects of our podcast optimization strategies, we had roughly 7% advertising growth. We are encouraged by the progress we're seeing in terms of market adoption of our new advertising tools, and continue to expect improved growth in the second half of 2026. Thanks, Gustav, and thanks, everyone, for joining us. thanks gustav and thanks everyone for joining us I'll cover the quarter four results and provide some perspective on our outlook. i'll cover the quarter four results and provide some perspective on our outlook Unless otherwise noted, all reference growth metrics are presented on a year-on-year constant currency basis. unless otherwise noted all reference growth metrics are presented on a year-on-year constant currency basis Overall, we're pleased with our strong quarter four finish. overall we're pleased with our strong quarter four finish Total revenue grew at an accelerated 13% to EUR 4.5 billion. total revenue grew at an accelerated 13% to eur 4.5 billion Premium revenue rose 14% versus 13% last quarter, and was primarily driven by subscriber growth. premium revenue rose 14% versus 13% last quarter and was primarily driven by subscriber growth Our advertising business grew 4%, flat last versus flat last quarter. our advertising business grew 4% flat last versus flat last quarter On a like-for-like basis, excluding the effects of our podcast optimization strategies, we had roughly 7% advertising growth. on a like-for-like basis excluding the effects of our podcast optimization strategies we had roughly 7% advertising growth We are encouraged by the progress we're seeing in terms of market adoption of our new advertising tools, and continue to expect improved growth in the second half of 2026. we are encouraged by the progress we're seeing in terms of market adoption of our new advertising tools and continue to expect improved growth in the second half of 2026 Moving to profitability, gross margin came in at 33.1%, expanding just over 80 basis points year-on-year. Our outperformance here was primarily driven by content cost favorability. Operating income of EUR 701 million was EUR 81 million above forecast, of which social charges had a positive impact of EUR 67 million due to share price movements. The remaining variance to guidance was prime, was driven by the gross margin outperformance. Finally, free cash flow was EUR 834 million in quarter four, and we ended the quarter with EUR 9.5 billion in cash and short-term investments. We repurchased $433 million dollars worth of shares in quarter four, and will continue to opportunistically return capital via share buybacks. In summary, quarter four capped off another year of healthy growth with profitability and cash flow improvement for us. Moving to profitability, gross margin came in at 33.1%, expanding just over 80 basis points year-on-year. moving to profitability gross margin came in at 33.1% expanding just over 80 basis points year-on-year Our outperformance here was primarily driven by content cost favorability. our outperformance here was primarily driven by content cost favorability Operating income of EUR 701 million was EUR 81 million above forecast, of which social charges had a positive impact of EUR 67 million due to share price movements. operating income of eur 701 million was eur 81 million above forecast of which social charges had a positive impact of eur 67 million due to share price movements The remaining variance to guidance was prime, was driven by the gross margin out performance. the remaining variance to guidance was prime was driven by the gross margin out performance Finally, free cash flow was EUR 834 million in quarter four, and we ended the quarter with EUR 9.5 billion in cash and short-term investments. finally free cash flow was eur 834 million in quarter four and we ended the quarter with eur 9.5 billion in cash and short-term investments We repurchased $433 million dollars worth of shares in quarter four, and will continue to opportunistically return capital via share buybacks. we repurchased $433 million dollars worth of shares in quarter four and will continue to opportunistically return capital via share buybacks In summary, quarter four capped off another year of healthy growth with profitability and cash flow improvement for us. in summary quarter four capped off another year of healthy growth with profitability and cash flow improvement for us On a full-year basis, 2025, revenue grew 13%, gross profit grew 20%, and operating income grew in excess of 50% to deliver a full-year margin of 13%. Our free cash flow generation improved by approximately EUR 600 million to a record EUR 2.9 billion. Looking ahead to quarter one, we are forecasting 759 million MAU, an increase of 8 million from quarter four, and 293 million subscribers. In quarter one, which is seasonally our smallest quarter, our subscriber outlook implies net addition of 3 million. This is within our historical range for quarter one. The effects of new pricing implementation in quarter one are considered in our forecast, and as Alex mentioned, the churn with respect to these price increases is in line with our expectations. On a full-year basis, 2025, revenue grew 13%, gross profit grew 20%, and operating income grew in excess of 50% to deliver a full-year margin of 13%. on a full-year basis 2025 revenue grew 13% gross profit grew 20% and operating income grew in excess of 50% to deliver a full-year margin of 13% Our free cash flow generation improved by approximately EUR 600 million to a record EUR 2.9 billion. our free cash flow generation improved by approximately eur 600 million to a record eur 2.9 billion Looking ahead to quarter one, we are forecasting 759 million MAU, an increase of 8 million from quarter four, and 293 million subscribers. looking ahead to quarter one we are forecasting 759 million mau an increase of 8 million from quarter four and 293 million subscribers In quarter one, which is seasonally our smallest quarter, our subscriber outlook implies net addition of 3 million. in quarter one which is seasonally our smallest quarter our subscriber outlook implies net addition of 3 million This is within our historical range for quarter one. this is within our historical range for quarter one The effects of new pricing implementation in quarter one are considered in our forecast, and as Alex mentioned, the churn with respect to these price increases is in line with our expectations. the effects of new pricing implementation in quarter one are considered in our forecast and as alex mentioned the churn with respect to these price increases is in line with our expectations In addition, we remain very encouraged by the early benefits we're seeing to our funnel, thanks to the enhanced free tier that we rolled out in late quarter three. We are well-positioned for conversion and continued healthy subscriber growth in 2026. We're also forecasting EUR 4.5 billion in total quarter one revenue, representing an improved growth rate of approximately 15% versus the 13% we just delivered in quarter four. We're forecasting ARPA growth in the 5%-6% range. Our revenue outlooks also incorporates the effects of unfavorable currency movements, which results in an incremental EUR 35 million headwind when compared to prior quarter exchange rates. We expect a quarter one gross margin of 32.8% and operating income of EUR 660 million. In addition, we remain very encouraged by the early benefits we're seeing to our funnel, thanks to the enhanced free tier that we rolled out in late quarter three. in addition we remain very encouraged by the early benefits we're seeing to our funnel thanks to the enhanced free tier that we rolled out in late quarter three We are well-positioned for conversion and continued healthy subscriber growth in 2026. we are well-positioned for conversion and continued healthy subscriber growth in 2026 We're also forecasting EUR 4.5 billion in total quarter one revenue, representing an improved growth rate of approximately 15% versus the 13% we just delivered in quarter four. we're also forecasting eur 4.5 billion in total quarter one revenue representing an improved growth rate of approximately 15% versus the 13% we just delivered in quarter four We're forecasting ARPA growth in the 5%-6% range. we're forecasting arpa growth in the 5%-6% range Our revenue outlooks also incorporates the effects of unfavorable currency movements, which results in an incremental EUR 35 million headwind when compared to prior quarter exchange rates. our revenue outlooks also incorporates the effects of unfavorable currency movements which results in an incremental eur 35 million headwind when compared to prior quarter exchange rates We expect a quarter one gross margin of 32.8% and operating income of EUR 660 million. we expect a quarter one gross margin of 32.8% and operating income of eur 660 million While we do not give full year guidance for gross margin and operating margin, we are expecting both to improve in 2026. For gross margin, we expect our recent pricing adjustments to help drive revenue growth that outpaces the net content cost growth in 2026. That said, the quarterly progression of our margins could again be variable, depending on the timing of disciplined investments in our core and monetization activities. Finally, we expect our free cash flow generation to meaningfully exceed what we generated in 2025, while reflecting progression towards a normalized long-term tax rate. In conclusion, we are confident in our path into 2026, and we'll make further progress on driving top-line growth, disciplined reinvestments, and expect improved margin and cash flow. With that, I hand it back to you, Bryan. While we do not give full year guidance for gross margin and operating margin, we are expecting both to improve in 2026. while we do not give full year guidance for gross margin and operating margin we are expecting both to improve in 2026 For gross margin, we expect our recent pricing adjustments to help drive revenue growth that outpaces the net content cost growth in 2026. for gross margin we expect our recent pricing adjustments to help drive revenue growth that outpaces the net content cost growth in 2026 That said, the quarterly progression of our margins could again be variable, depending on the timing of disciplined investments in our core and monetization activities. that said the quarterly progression of our margins could again be variable depending on the timing of disciplined investments in our core and monetization activities Finally, we expect our free cash flow generation to meaningfully exceed what we generated in 2025, while reflecting progression towards a normalized long-term tax rate. finally we expect our free cash flow generation to meaningfully exceed what we generated in 2025 while reflecting progression towards a normalized long-term tax rate In conclusion, we are confident in our path into 2026, and we'll make further progress on driving top-line growth, disciplined reinvestments, and expect improved margin and cash flow. in conclusion we are confident in our path into 2026 and we'll make further progress on driving top-line growth disciplined reinvestments and expect improved margin and cash flow With that, I hand it back to you, Bryan. with that i hand it back to you bryan

Speaker 2: All right. Thanks, Christian. Again, if you've got any questions, please go to Slido.com, #SpotifyEarningsQ425. We'll be reading the questions in the order they appear in the queue with respect to how people vote up their preferences. Our first question today is going to come from Jessica Reif Ehrlich on AI opportunities. Across all sectors, the market is acutely focused on AI and its impact on current business models. How is Spotify planning to use AI tools and applications for new and evolving product offers, and will this eventually lead to new tiers of service? All right. all right Thanks, Christian. thanks christian Again, if you've got any questions, please go to Slido.com, #SpotifyEarningsQ425. again if you've got any questions please go to slido.com #spotifyearningsq425 We'll be reading the questions in the order they appear in the queue with respect to how people vote up their preferences. we'll be reading the questions in the order they appear in the queue with respect to how people vote up their preferences Our first question today is going to come from Jessica Reif Ehrlich on AI opportunities. our first question today is going to come from jessica reif ehrlich on ai opportunities Across all sectors, the market is acutely focused on AI and its impact on current business models. across all sectors the market is acutely focused on ai and its impact on current business models How is Spotify planning to use AI tools and applications for new and evolving product offers, and will this eventually lead to new tiers of service? how is spotify planning to use ai tools and applications for new and evolving product offers and will this eventually lead to new tiers of service

Speaker 5: Thank you, Jessica. This is Gustav. I'll take this, and this is a big question. I'll try to keep the answer to under 30 minutes. Just kidding. I tried to answer some of this upfront in my prepared remarks, but I want to say one additional thing. If we just zoom out and look at what is happening right now is the typical example of what is called a macro change, right? Now, Spotify has lived through many macro changes, and I think it's important to know that while many people are scared in times of change, this is when there is the most opportunity. If you look at Spotify, it was born out of a macro change, which was ubiquitous, cheap broadband. That's how we got the scale. And then this next huge wave came across us, called the smartphone. What happened? Thank you, Jessica. thank you jessica This is Gustav. this is gustav I'll take this, and this is a big question. i'll take this and this is a big question I'll try to keep the answer to under 30 minutes. i'll try to keep the answer to under 30 minutes Just kidding. just kidding I tried to answer some of this upfront in my prepared remarks, but I want to say one additional thing. i tried to answer some of this upfront in my prepared remarks but i want to say one additional thing If we just zoom out and look at what is happening right now is the typical example of what is called a macro change, right? if we just zoom out and look at what is happening right now is the typical example of what is called a macro change right Now, Spotify has lived through many macro changes, and I think it's important to know that while many people are scared in times of change, this is when there is the most opportunity. now spotify has lived through many macro changes and i think it's important to know that while many people are scared in times of change this is when there is the most opportunity If you look at Spotify, it was born out of a macro change, which was ubiquitous, cheap broadband. if you look at spotify it was born out of a macro change which was ubiquitous cheap broadband That's how we got the scale. that's how we got the scale And then this next huge wave came across us, called the smartphone. and then this next huge wave came across us called the smartphone What happened? what happened Spotify accelerated and started growing faster. Then the next macro wave came, which was called personalization. What happened? Spotify embraced it and grew even faster. Then the next thing came, which was the connected home. We all forgot about it now, but it was a big deal. What happened? Spotify started growing faster, over 2,000 integrations with hardware partners. The thing about macro change is that if you capture it, it's an opportunity, not a headwind. This is what we're focused on, and we feel very well positioned for this opportunity. As I shared in my initial remarks, the first thing to look at is: Do you even have the right business model? If you look at the AI companies, the business model is subscription and increasingly ads. That's what we excel at. Spotify accelerated and started growing faster. spotify accelerated and started growing faster Then the next macro wave came, which was called personalization. then the next macro wave came which was called personalization What happened? what happened Spotify embraced it and grew even faster. spotify embraced it and grew even faster Then the next thing came, which was the connected home. then the next thing came which was the connected home We all forgot about it now, but it was a big deal. we all forgot about it now but it was a big deal What happened? what happened Spotify started growing faster, over 2,000 integrations with hardware partners. spotify started growing faster over 2,000 integrations with hardware partners The thing about macro change is that if you capture it, it's an opportunity, not a headwind. the thing about macro change is that if you capture it it's an opportunity not a headwind This is what we're focused on, and we feel very well positioned for this opportunity. this is what we're focused on and we feel very well positioned for this opportunity As I shared in my initial remarks, the first thing to look at is: Do you even have the right business model? as i shared in my initial remarks the first thing to look at is do you even have the right business model If you look at the AI companies, the business model is subscription and increasingly ads. if you look at the ai companies the business model is subscription and increasingly ads That's what we excel at. that's what we excel at So we have the right business model, and I don't see that changing for the consumer space. So we feel very positioned from a structural point of view. On top of that, as I shared, we've been investing towards this opportunity for many years now, because while it's happened faster than many people think, it was not impossible to foresee that this would happen. If you just believed in the exponential, we would get here. This is why we are leading in the market with these interactive, natural language-based services in terms of media platforms. So to be specific about what I'm excited about, I'm excited about us being the first truly intelligent agentic media service that you can literally talk to, talk to. And this is not just a pipe dream. So we have the right business model, and I don't see that changing for the consumer space. so we have the right business model and i don't see that changing for the consumer space So we feel very positioned from a structural point of view. so we feel very positioned from a structural point of view On top of that, as I shared, we've been investing towards this opportunity for many years now, because while it's happened faster than many people think, it was not impossible to foresee that this would happen. on top of that as i shared we've been investing towards this opportunity for many years now because while it's happened faster than many people think it was not impossible to foresee that this would happen If you just believed in the exponential, we would get here. if you just believed in the exponential we would get here This is why we are leading in the market with these interactive, natural language-based services in terms of media platforms. this is why we are leading in the market with these interactive natural language-based services in terms of media platforms So to be specific about what I'm excited about, I'm excited about us being the first truly intelligent agentic media service that you can literally talk to, talk to. so to be specific about what i'm excited about i'm excited about us being the first truly intelligent agentic media service that you can literally talk to talk to And this is not just a pipe dream. and this is not just a pipe dream You can already talk to Spotify through the AI DJ casually, but also through Prompt the Playlist in sort of a deep research way. We're going to keep investing in that. What that means structurally for Spotify is that we are building a data set that never existed, which is the data set of language to music, language to podcast, and language to books. We've had the song-to-song data set, but no one had the language-to-song data set. And I want to drive home a point here, which is this is a very specific data set. You may think it is a canonical data set, meaning there is a factual answer to, for example, "What is workout music?" There is no factual answer to what is workout music. In fact, it turns out that taste is not a fact, it's an opinion. You can already talk to Spotify through the AI DJ casually, but also through Prompt the Playlist in sort of a deep research way. you can already talk to spotify through the ai dj casually but also through prompt the playlist in sort of a deep research way We're going to keep investing in that. we're going to keep investing in that What that means structurally for Spotify is that we are building a data set that never existed, which is the data set of language to music, language to podcast, and language to books. what that means structurally for spotify is that we are building a data set that never existed which is the data set of language to music language to podcast and language to books We've had the song-to-song data set, but no one had the language-to-song data set. we've had the song-to-song data set but no one had the language-to-song data set And I want to drive home a point here, which is this is a very specific data set. and i want to drive home a point here which is this is a very specific data set You may think it is a canonical data set, meaning there is a factual answer to, for example, "What is workout music?" There is no factual answer to what is workout music. you may think it is a canonical data set meaning there is a factual answer to for example "what is workout music?" there is no factual answer to what is workout music In fact, it turns out that taste is not a fact, it's an opinion. in fact it turns out that taste is not a fact it's an opinion So if you look at something like workout music, on average, for an American, it's usually hip hop. For a European, it's usually EDM. For many Scandinavians, it's something like heavy metal or even death metal. But then again, for a lot of Americans, millions at least, it's also death metal. So there is no canonical answer to what does workout music mean? You can't just have an LLM commoditize it as a fact, the way you can commoditize Wikipedia. You actually need to have many, many hundreds of millions of listeners across the world's market constantly telling you what it means for that specific person. This is the data set that we are building right now, that no one else is really building. It doesn't exist at this scale, and we see it improving every time we retrain our models. This is, this is what I'm excited about. So if you look at something like workout music, on average, for an American, it's usually hip hop. so if you look at something like workout music on average for an american it's usually hip hop For a European, it's usually EDM. for a european it's usually edm For many Scandinavians, it's something like heavy metal or even death metal. for many scandinavians it's something like heavy metal or even death metal But then again, for a lot of Americans, millions at least, it's also death metal. but then again for a lot of americans millions at least it's also death metal So there is no canonical answer to what does workout music mean? so there is no canonical answer to what does workout music mean You can't just have an LLM commoditize it as a fact, the way you can commoditize Wikipedia. you can't just have an llm commoditize it as a fact the way you can commoditize wikipedia You actually need to have many, many hundreds of millions of listeners across the world's market constantly telling you what it means for that specific person. you actually need to have many many hundreds of millions of listeners across the world's market constantly telling you what it means for that specific person This is the data set that we are building right now, that no one else is really building. this is the data set that we are building right now that no one else is really building It doesn't exist at this scale, and we see it improving every time we retrain our models. it doesn't exist at this scale and we see it improving every time we retrain our models This is, this is what I'm excited about. this is this is what i'm excited about I think I'll, I'll stop there, or I'll take the whole Q&A. I think I'll, I'll stop there, or I'll take the whole Q&A. i think i'll i'll stop there or i'll take the whole q&a

Speaker 2: All right, our next question is going to come from Doug Anmuth on Gross Margin. What are the drivers of Gross Margin expansion in 2026, and do they shift at all from recent years? All right, our next question is going to come from Doug Anmuth on Gross Margin. all right our next question is going to come from doug anmuth on gross margin What are the drivers of Gross Margin expansion in 2026, and do they shift at all from recent years? what are the drivers of gross margin expansion in 2026 and do they shift at all from recent years

Speaker 1: Hey, Doug, I'll take that. Alex here, and then Christian, you may jump in. I'm confident in our Gross Margin trajectory in terms of making progress towards our long-term goals that we've talked about before. We intend to do it in a steady and sustainable manner, and the way we're really managing our Gross Margin is a balance between a couple of different things. One is thoughtful monetization. Two, we want to be disciplined with reinvestment and our cost of revenue. And of course, we're going to innovate to create even more differentiation for our platform. And if you think a bit about the last few years, and look at our trajectory, I think we've got a pretty good track record in striking this very balance. Hey, Doug, I'll take that. hey doug i'll take that Alex here, and then Christian, you may jump in. alex here and then christian you may jump in I'm confident in our Gross Margin trajectory in terms of making progress towards our long-term goals that we've talked about before. i'm confident in our gross margin trajectory in terms of making progress towards our long-term goals that we've talked about before We intend to do it in a steady and sustainable manner, and the way we're really managing our Gross Margin is a balance between a couple of different things. we intend to do it in a steady and sustainable manner and the way we're really managing our gross margin is a balance between a couple of different things One is thoughtful monetization. one is thoughtful monetization Two, we want to be disciplined with reinvestment and our cost of revenue. two we want to be disciplined with reinvestment and our cost of revenue And of course, we're going to innovate to create even more differentiation for our platform. and of course we're going to innovate to create even more differentiation for our platform And if you think a bit about the last few years, and look at our trajectory, I think we've got a pretty good track record in striking this very balance. and if you think a bit about the last few years and look at our trajectory i think we've got a pretty good track record in striking this very balance

Speaker 3: Hey, Christian here. I just want to fill in. I mean, to start with, just going back a bit to my own script, we, we do want to invest, and we will invest in, in future value when we see we have that opportunity, and, and that is what we're doing. And creating long-term value is what we're looking for every day. But, but looking at the gross margin base here in quarter four, going into quarter one, and also for next year, and the, the things that drives that, I mean, what I said was that the price increases that we have done here is, is going to outpace the net content cost in 2026. Hey, Christian here. hey christian here I just want to fill in. i just want to fill in I mean, to start with, just going back a bit to my own script, we, we do want to invest, and we will invest in, in future value when we see we have that opportunity, and, and that is what we're doing. i mean to start with just going back a bit to my own script we we do want to invest and we will invest in in future value when we see we have that opportunity and and that is what we're doing And creating long-term value is what we're looking for every day. and creating long-term value is what we're looking for every day But, but looking at the gross margin base here in quarter four, going into quarter one, and also for next year, and the, the things that drives that, I mean, what I said was that the price increases that we have done here is, is going to outpace the net content cost in 2026. but but looking at the gross margin base here in quarter four going into quarter one and also for next year and the the things that drives that i mean what i said was that the price increases that we have done here is is going to outpace the net content cost in 2026 Remembering also that we are improving our ads business slowly as we go forward, and we feel that that will pick up in the second half of 2026. We have a marketplace that added both to gross income and margin in 2025. That is also a good tool for us. And finally, as we expand new verticals within the countries that we are in and also to new countries, that is also a good support for our margin development. Remembering also that we are improving our ads business slowly as we go forward, and we feel that that will pick up in the second half of 2026. remembering also that we are improving our ads business slowly as we go forward and we feel that that will pick up in the second half of 2026 We have a marketplace that added both to gross income and margin in 2025. we have a marketplace that added both to gross income and margin in 2025 That is also a good tool for us. that is also a good tool for us And finally, as we expand new verticals within the countries that we are in and also to new countries, that is also a good support for our margin development. and finally as we expand new verticals within the countries that we are in and also to new countries that is also a good support for our margin development

Speaker 2: All right, our next question is going to come from Jessica Reif Ehrlich again, this time on advertising. You've spent the last two years building out your ad tech platform. Can you provide a progress report? Where are you seeing the most progress, and where do you have more work to do? And will there be a step change in advertising growth later this year? All right, our next question is going to come from Jessica Reif Ehrlich again, this time on advertising. all right our next question is going to come from jessica reif ehrlich again this time on advertising You've spent the last two years building out your ad tech platform. you've spent the last two years building out your ad tech platform Can you provide a progress report? can you provide a progress report Where are you seeing the most progress, and where do you have more work to do? where are you seeing the most progress and where do you have more work to do And will there be a step change in advertising growth later this year? and will there be a step change in advertising growth later this year

Speaker 1: Thanks, Jessica. You know, it's now one an a half years since we decided to re-engineer Spotify's ad stack and really move off of a rented stack. And we did this primarily to better match what our clients asked of us, the way they would like to buy on Spotify. And frankly, we did this also to meet and exceed the standards of really what is a high-performance, self-serve, and biddable stack. It was a tough call back in that moment, since it meant that... You know, I knew it meant that we had to take some pain, as this was going to be deep surgery for us. Thanks, Jessica. thanks jessica You know, it's now one an a half years since we decided to re-engineer Spotify's ad stack and really move off of a rented stack. you know it's now one an a half years since we decided to re-engineer spotify's ad stack and really move off of a rented stack And we did this primarily to better match what our clients asked of us, the way they would like to buy on Spotify. and we did this primarily to better match what our clients asked of us the way they would like to buy on spotify And frankly, we did this also to meet and exceed the standards of really what is a high-performance, self-serve, and biddable stack. and frankly we did this also to meet and exceed the standards of really what is a high-performance self-serve and biddable stack It was a tough call back in that moment, since it meant that... it was a tough call back in that moment since it meant that You know, I knew it meant that we had to take some pain, as this was going to be deep surgery for us. you know i knew it meant that we had to take some pain as this was going to be deep surgery for us We now have. I'm happy to say that, I mean, we now have record levels of advertisers on the platform, and that increased density means much better yield, and, and as a result, more revenue growth for us. We are positive on ads. We still have work to do, but we're definitely making good progress and seeing very positive signs. We now have. we now have I'm happy to say that, I mean, we now have record levels of advertisers on the platform, and that increased density means much better yield, and, and as a result, more revenue growth for us. i'm happy to say that i mean we now have record levels of advertisers on the platform and that increased density means much better yield and and as a result more revenue growth for us We are positive on ads. we are positive on ads We still have work to do, but we're definitely making good progress and seeing very positive signs. we still have work to do but we're definitely making good progress and seeing very positive signs

Speaker 2: Okay, and looks like one more question from Jessica, this time on, capital allocation. Christian, can you provide an update on your views on capital returns, given your extremely strong balance sheet? Okay, and looks like one more question from Jessica, this time on, capital allocation. okay and looks like one more question from jessica this time on capital allocation Christian, can you provide an update on your views on capital returns, given your extremely strong balance sheet? christian can you provide an update on your views on capital returns given your extremely strong balance sheet

Speaker 3: Thank you, Jessica. Yeah, well, it is a relevant question when we have now a good cash flow and we also have a strong balance sheet. I mean, we have said that before. Our primary goal is to reinvest in the business, and as we do that, we actually can increase our growth levels, and when we increase our growth levels, we can get more money to invest back and do that flywheel that Alex talked about in his script. That is the. You have to always remember, that is our first thought every day in this company, to grow the company. And as we've said, if we're going to have room for also returning something to the shareholders, we can do that. Thank you, Jessica. thank you jessica Yeah, well, it is a relevant question when we have now a good cash flow and we also have a strong balance sheet. yeah well it is a relevant question when we have now a good cash flow and we also have a strong balance sheet I mean, we have said that before. i mean we have said that before Our primary goal is to reinvest in the business, and as we do that, we actually can increase our growth levels, and when we increase our growth levels, we can get more money to invest back and do that flywheel that Alex talked about in his script. our primary goal is to reinvest in the business and as we do that we actually can increase our growth levels and when we increase our growth levels we can get more money to invest back and do that flywheel that alex talked about in his script That is the. that is the You have to always remember, that is our first thought every day in this company, to grow the company. you have to always remember that is our first thought every day in this company to grow the company And as we've said, if we're going to have room for also returning something to the shareholders, we can do that. and as we've said if we're going to have room for also returning something to the shareholders we can do that In 2025 duration, we did EUR 510 million in buybacks in the market. That is still an option for us also going forward, especially to cover up for dilution. In addition to that, as you know, we have EUR 1.5 billion falling due or plus in convertible note now in March, which we will settle in cash. In 2025 duration, we did EUR 510 million in buybacks in the market. in 2025 duration we did eur 510 million in buybacks in the market That is still an option for us also going forward, especially to cover up for dilution. that is still an option for us also going forward especially to cover up for dilution In addition to that, as you know, we have EUR 1.5 billion falling due or plus in convertible note now in March, which we will settle in cash. in addition to that as you know we have eur 1.5 billion falling due or plus in convertible note now in march which we will settle in cash

Speaker 2: Okay, our next question comes from Eric Sheridan on AI opportunity. Can you discuss your latest thoughts with respect to AI on, one, its role in product and platform evolution for the company; two, its effect to transform your internal processes; and three, the broader audio content creation and distribution landscape? Okay, our next question comes from Eric Sheridan on AI opportunity. okay our next question comes from eric sheridan on ai opportunity Can you discuss your latest thoughts with respect to AI on, one, its role in product and platform evolution for the company; two, its effect to transform your internal processes; and three, the broader audio content creation and distribution landscape? can you discuss your latest thoughts with respect to ai on one its role in product and platform evolution for the company two its effect to transform your internal processes and three the broader audio content creation and distribution landscape

Speaker 5: Thank you, Eric. This is, this is Gustav. I think I touched on a lot of this in my opening remarks, but I'll, I'll summarize it briefly. In terms of its role in product development, as I said, you can actually already see that we spent a lot of last year rebuilding the company for an agentic age, so that you can launch these services, where a user can now ask Spotify a question in English that would have required you to be a senior developer at Spotify to be able to answer before. A year ago, only a very senior developer at Spotify could, could answer the question of: "What was the first track I ever listened to on Spotify? Thank you, Eric. thank you eric This is, this is Gustav. this is this is gustav I think I touched on a lot of this in my opening remarks, but I'll, I'll summarize it briefly. i think i touched on a lot of this in my opening remarks but i'll i'll summarize it briefly In terms of its role in product development, as I said, you can actually already see that we spent a lot of last year rebuilding the company for an agentic age, so that you can launch these services, where a user can now ask Spotify a question in English that would have required you to be a senior developer at Spotify to be able to answer before. in terms of its role in product development as i said you can actually already see that we spent a lot of last year rebuilding the company for an agentic age so that you can launch these services where a user can now ask spotify a question in english that would have required you to be a senior developer at spotify to be able to answer before A year ago, only a very senior developer at Spotify could, could answer the question of: "What was the first track I ever listened to on Spotify? a year ago only a very senior developer at spotify could could answer the question of "what was the first track i ever listened to on spotify Please take the ones I listened to more than three times and match them against, what was popular at the time." Now, anyone can do that, just using English. So we've been spending time rebuilding the company for this age before. It's a little bit late to start now. You should have started about two years ago, which we did. And now you're starting to see the products on top of this roll out, and as I teased, we really want to be the world's first truly intelligent media platform. You will hear us talk more about this at the Investor Day, so I won't share many more details now, but stay tuned for that. Please take the ones I listened to more than three times and match them against, what was popular at the time." Now, anyone can do that, just using English. please take the ones i listened to more than three times and match them against what was popular at the time." now anyone can do that just using english So we've been spending time rebuilding the company for this age before. so we've been spending time rebuilding the company for this age before It's a little bit late to start now. it's a little bit late to start now You should have started about two years ago, which we did. you should have started about two years ago which we did And now you're starting to see the products on top of this roll out, and as I teased, we really want to be the world's first truly intelligent media platform. and now you're starting to see the products on top of this roll out and as i teased we really want to be the world's first truly intelligent media platform You will hear us talk more about this at the Investor Day, so I won't share many more details now, but stay tuned for that. you will hear us talk more about this at the investor day so i won't share many more details now but stay tuned for that In terms of transformation of internal processes, I did briefly share in my prepared remarks this tool called Honk, where you can, using code, literally on the bus or the train, just ask Claude to add a feature or a bug to, for example, the iOS code base. It will push a QR code back to you so that you can actually try the app with that feature. If you like it, you can merge it to production without even getting off the bus. This is speeding us up tremendously. Now, we foresee this not being the end of the line in terms of AI development, just the beginning. I'm not going to give away more secrets about how we're going to capture it, but you can be sure that we are capturing this. In terms of transformation of internal processes, I did briefly share in my prepared remarks this tool called Honk, where you can, using code, literally on the bus or the train, just ask Claude to add a feature or a bug to, for example, the iOS code base. in terms of transformation of internal processes i did briefly share in my prepared remarks this tool called honk where you can using code literally on the bus or the train just ask claude to add a feature or a bug to for example the ios code base It will push a QR code back to you so that you can actually try the app with that feature. it will push a qr code back to you so that you can actually try the app with that feature If you like it, you can merge it to production without even getting off the bus. if you like it you can merge it to production without even getting off the bus This is speeding us up tremendously. this is speeding us up tremendously Now, we foresee this not being the end of the line in terms of AI development, just the beginning. now we foresee this not being the end of the line in terms of ai development just the beginning I'm not going to give away more secrets about how we're going to capture it, but you can be sure that we are capturing this. i'm not going to give away more secrets about how we're going to capture it but you can be sure that we are capturing this We're retooling the entire company for this age, and it's going to be a lot of change. But as I said before, change, if you capture it, is opportunity. We're retooling the entire company for this age, and it's going to be a lot of change. we're retooling the entire company for this age and it's going to be a lot of change But as I said before, change, if you capture it, is opportunity. but as i said before change if you capture it is opportunity

Speaker 2: Okay, our next question is going to come from Rich Greenfield on AI music. What percentage of music on Spotify today is AI-generated? How much AI-generated content is being uploaded daily, and what is your policy on the uploading of AI music? Okay, our next question is going to come from Rich Greenfield on AI music. okay our next question is going to come from rich greenfield on ai music What percentage of music on Spotify today is AI-generated? what percentage of music on spotify today is ai-generated How much AI-generated content is being uploaded daily, and what is your policy on the uploading of AI music? how much ai-generated content is being uploaded daily and what is your policy on the uploading of ai music

Speaker 5: Thanks, Rich. This is Gustav again. We don't share a percentage of music uploaded on Spotify that is AI-generated, but I'll talk to you about how we think about it. The way we think about it is, from a creative point of view, Spotify should not decide what kind of tools you're allowed to use. Allowed to use an electric guitar, a synthesizer, digital audio workstation, or AI, or a more complicated question, a bit of AI, like 1% AI, 15, 20, 100? We don't think it's our decision to make. What we do think, though, is that consumers would like to know and understand what tools were used, or what, you know, in the creation of their music. So we've been working with the industry to allow them, creators and labels uploading music-... Thanks, Rich. thanks rich This is Gustav again. this is gustav again We don't share a percentage of music uploaded on Spotify that is AI-generated, but I'll talk to you about how we think about it. we don't share a percentage of music uploaded on spotify that is ai-generated but i'll talk to you about how we think about it The way we think about it is, from a creative point of view, Spotify should not decide what kind of tools you're allowed to use. the way we think about it is from a creative point of view spotify should not decide what kind of tools you're allowed to use Allowed to use an electric guitar, a synthesizer, digital audio workstation, or AI, or a more complicated question, a bit of AI, like 1% AI, 15, 20, 100? allowed to use an electric guitar a synthesizer digital audio workstation or ai or a more complicated question a bit of ai like 1% ai 15 20 100 We don't think it's our decision to make. we don't think it's our decision to make What we do think, though, is that consumers would like to know and understand what tools were used, or what, you know, in the creation of their music. what we do think though is that consumers would like to know and understand what tools were used or what you know in the creation of their music So we've been working with the industry to allow them, creators and labels uploading music-... so we've been working with the industry to allow them creators and labels uploading music- To put in the metadata, how it was created, so that we can surface this to users. And you just recently saw a feature, feature called About the Song that we launched, that literally tells you about the song, what the internet is saying. But as creators start adding this data, we can also tell the consumers how this song was made, because we think people want to know. So that's how we think about it. I also want to mention that one thing that AI can do is to accelerate the amount of spammy tracks. I want to be clear that there has always been people trying to abuse Spotify because it's a big economy, using spammy tracks. To put in the metadata, how it was created, so that we can surface this to users. to put in the metadata how it was created so that we can surface this to users And you just recently saw a feature, feature called About the Song that we launched, that literally tells you about the song, what the internet is saying. and you just recently saw a feature feature called about the song that we launched that literally tells you about the song what the internet is saying But as creators start adding this data, we can also tell the consumers how this song was made, because we think people want to know. but as creators start adding this data we can also tell the consumers how this song was made because we think people want to know So that's how we think about it. so that's how we think about it I also want to mention that one thing that AI can do is to accelerate the amount of spammy tracks. i also want to mention that one thing that ai can do is to accelerate the amount of spammy tracks I want to be clear that there has always been people trying to abuse Spotify because it's a big economy, using spammy tracks. i want to be clear that there has always been people trying to abuse spotify because it's a big economy using spammy tracks AI is a tool that could help accelerate that, but because it's been a problem for a long time, we've been investing more than anyone else in the industry to curb this problem. So for us, spammy AI music is not a new problem, it's just more scale on an existing problem that we actually feel we are leading. In general, as more content gets created with ever more advanced tools, this is a good thing for Spotify. As more content gets created and uploaded, the personalization problem becomes more important, because now there's a bigger catalog. You need to understand individual users' taste even better. So we see this development, and this is nothing new. When Spotify started, I think there were, at most, tens of millions of tracks. Now there are hundreds of millions. AI is a tool that could help accelerate that, but because it's been a problem for a long time, we've been investing more than anyone else in the industry to curb this problem. ai is a tool that could help accelerate that but because it's been a problem for a long time we've been investing more than anyone else in the industry to curb this problem So for us, spammy AI music is not a new problem, it's just more scale on an existing problem that we actually feel we are leading. so for us spammy ai music is not a new problem it's just more scale on an existing problem that we actually feel we are leading In general, as more content gets created with ever more advanced tools, this is a good thing for Spotify. in general as more content gets created with ever more advanced tools this is a good thing for spotify As more content gets created and uploaded, the personalization problem becomes more important, because now there's a bigger catalog. as more content gets created and uploaded the personalization problem becomes more important because now there's a bigger catalog You need to understand individual users' taste even better. you need to understand individual users' taste even better So we see this development, and this is nothing new. so we see this development and this is nothing new When Spotify started, I think there were, at most, tens of millions of tracks. when spotify started i think there were at most tens of millions of tracks Now there are hundreds of millions. now there are hundreds of millions So the 10x explosion has already happened over the last 20 years. So this is something that we're used to. That's how we're thinking about it. So the 10x explosion has already happened over the last 20 years. so the 10x explosion has already happened over the last 20 years So this is something that we're used to. so this is something that we're used to That's how we're thinking about it. that's how we're thinking about it

Speaker 2: Looks like, well, we've got a follow-up and a related question from Rich. Is Spotify planning to win in AI? The bear thesis on Spotify is that Udio, Suno, Klay, and Stability not only enable consumers to create AI music, but also become DSPs that take share from Spotify, with Spotify taking a more cautious approach. Any comments on that? Looks like, well, we've got a follow-up and a related question from Rich. looks like well we've got a follow-up and a related question from rich Is Spotify planning to win in AI? is spotify planning to win in ai The bear thesis on Spotify is that Udio, Suno, Klay, and Stability not only enable consumers to create AI music, but also become DSPs that take share from Spotify, with Spotify taking a more cautious approach. the bear thesis on spotify is that udio suno klay and stability not only enable consumers to create ai music but also become dsps that take share from spotify with spotify taking a more cautious approach Any comments on that? any comments on that

Speaker 1: Hey, Rich, Alex here. It's good to hear from you. So I spend a lot of time with the industry, the music industry, and with artists. And there isn't any doubt that everyone is optimistic about the future, and that AI is an important moment for all of us. And as Spotify, we provide a service to rights holders and artists and songwriters, a service to distribute and monetize their art. And the key point here, this is a scaled service with a working business model. This is where you go to put your new songs, whichever technology or instrument or tool you use to create it. And you know, I've done the rounds, and no rights holder is against our vision. We pretty much have the whole industry lined up behind us. Hey, Rich, Alex here. hey rich alex here It's good to hear from you. it's good to hear from you So I spend a lot of time with the industry, the music industry, and with artists. so i spend a lot of time with the industry the music industry and with artists And there isn't any doubt that everyone is optimistic about the future, and that AI is an important moment for all of us. and there isn't any doubt that everyone is optimistic about the future and that ai is an important moment for all of us And as Spotify, we provide a service to rights holders and artists and songwriters, a service to distribute and monetize their art. and as spotify we provide a service to rights holders and artists and songwriters a service to distribute and monetize their art And the key point here, this is a scaled service with a working business model. and the key point here this is a scaled service with a working business model This is where you go to put your new songs, whichever technology or instrument or tool you use to create it. this is where you go to put your new songs whichever technology or instrument or tool you use to create it And you know, I've done the rounds, and no rights holder is against our vision. and you know i've done the rounds and no rights holder is against our vision We pretty much have the whole industry lined up behind us. we pretty much have the whole industry lined up behind us Like Gustav mentioned before, we wanna do it in a controlled way, respecting artists and the community, and we will not do deals that aren't good for artists and ultimately Spotify. Like Gustav mentioned before, we wanna do it in a controlled way, respecting artists and the community, and we will not do deals that aren't good for artists and ultimately Spotify. like gustav mentioned before we wanna do it in a controlled way respecting artists and the community and we will not do deals that aren't good for artists and ultimately spotify

Speaker 2: All right. Question from Justin Patterson, also related to AI music. If you could expand a bit more on Spotify's role in AI music, do you need to invest in content creation tools? And how are you helping human creators build audiences and income streams in this environment? All right. all right Question from Justin Patterson, also related to AI music. question from justin patterson also related to ai music If you could expand a bit more on Spotify's role in AI music, do you need to invest in content creation tools? if you could expand a bit more on spotify's role in ai music do you need to invest in content creation tools And how are you helping human creators build audiences and income streams in this environment? and how are you helping human creators build audiences and income streams in this environment

Speaker 1: Justin, my friend, you've heard Gustav talk about how more catalog and interactivity is good for users and also good for the industry. So he sort of partially answered your question already, but I'll, I've talked to you about how AI really enhances the value of our platform. So we have in the past, including Daniel, has talked about optimizing the Lifetime Value for our subscribers, and that is ultimately when you accumulate all of that, what builds enterprise value for Spotify. And so the question is: How does AI do that? Well, one powerful way to drive Lifetime Value is to increase retention. And, you know, the best way to increase retention is to increase engagement. And the number one reason they engage more with Spotify, and happens also to be something that drives willingness to pay, is personalization. Justin, my friend, you've heard Gustav talk about how more catalog and interactivity is good for users and also good for the industry. justin my friend you've heard gustav talk about how more catalog and interactivity is good for users and also good for the industry So he sort of partially answered your question already, but I'll, I've talked to you about how AI really enhances the value of our platform. so he sort of partially answered your question already but i'll i've talked to you about how ai really enhances the value of our platform So we have in the past, including Daniel, has talked about optimizing the Lifetime Value for our subscribers, and that is ultimately when you accumulate all of that, what builds enterprise value for Spotify. so we have in the past including daniel has talked about optimizing the lifetime value for our subscribers and that is ultimately when you accumulate all of that what builds enterprise value for spotify And so the question is: How does AI do that? and so the question is how does ai do that Well, one powerful way to drive Lifetime Value is to increase retention. well one powerful way to drive lifetime value is to increase retention And, you know, the best way to increase retention is to increase engagement. and you know the best way to increase retention is to increase engagement And the number one reason they engage more with Spotify, and happens also to be something that drives willingness to pay, is personalization. and the number one reason they engage more with spotify and happens also to be something that drives willingness to pay is personalization And AI, whether it's general recommendations or reinforcement learning systems, it just takes personalization to a whole new level. And thus, you have a domino sequence of how really we enhance the value of our platform as we continue to invest in AI. AI leads to better personalization, better personalization leads to more engagement, more engagement leads to more retention, more retention leads to lifetime value, and boom, more lifetime value leads to more enterprise value. And AI, whether it's general recommendations or reinforcement learning systems, it just takes personalization to a whole new level. and ai whether it's general recommendations or reinforcement learning systems it just takes personalization to a whole new level And thus, you have a domino sequence of how really we enhance the value of our platform as we continue to invest in AI. and thus you have a domino sequence of how really we enhance the value of our platform as we continue to invest in ai AI leads to better personalization, better personalization leads to more engagement, more engagement leads to more retention, more retention leads to lifetime value, and boom, more lifetime value leads to more enterprise value. ai leads to better personalization better personalization leads to more engagement more engagement leads to more retention more retention leads to lifetime value and boom more lifetime value leads to more enterprise value

Speaker 5: I would just add to this, to your question of, do we need to invest in content creation tools? We have all the technology and capabilities that we need since a long time. This is a tech company, so we are working with the industry to enable these opportunities. I would just add to this, to your question of, do we need to invest in content creation tools? i would just add to this to your question of do we need to invest in content creation tools We have all the technology and capabilities that we need since a long time. we have all the technology and capabilities that we need since a long time This is a tech company, so we are working with the industry to enable these opportunities. this is a tech company so we are working with the industry to enable these opportunities

Speaker 2: All right, our next question is going to come from Batya Levi on premium pricing. Following the recent U.S. price increases, how do you see the price to value relationship of the service relative to your competitors, and how do you expect churn to play out versus prior rounds of price increases? All right, our next question is going to come from Batya Levi on premium pricing. all right our next question is going to come from batya levi on premium pricing Following the recent U.S. price increases, how do you see the price to value relationship of the service relative to your competitors, and how do you expect churn to play out versus prior rounds of price increases? following the recent u.s price increases how do you see the price to value relationship of the service relative to your competitors and how do you expect churn to play out versus prior rounds of price increases

Speaker 1: Thank you, Batya, one of my favorite topics. I'm really happy with the price increases we implemented back in January of this year. There have been really no surprises at all. Churn is low and came in according to our expectations. And just as a reminder, this $1 increase is the same magnitude as the U.S. price increase that we implemented back in, I think it was June of 2024. The one important thing to point out, though, is that price increases, as you know, is one of several levers we pull for growth, and when we adjust price, we do it from a position of strength. And you know this already, but I'll say it anyway, we evaluate pricing on a market-by-market basis, and we optimize for the long-term value of our platform. Thank you, Batya, one of my favorite topics. thank you batya one of my favorite topics I'm really happy with the price increases we implemented back in January of this year. i'm really happy with the price increases we implemented back in january of this year There have been really no surprises at all. there have been really no surprises at all Churn is low and came in according to our expectations. churn is low and came in according to our expectations And just as a reminder, this $1 increase is the same magnitude as the U.S. price increase that we implemented back in, I think it was June of 2024. and just as a reminder this $1 increase is the same magnitude as the u.s price increase that we implemented back in i think it was june of 2024 The one important thing to point out, though, is that price increases, as you know, is one of several levers we pull for growth, and when we adjust price, we do it from a position of strength. the one important thing to point out though is that price increases as you know is one of several levers we pull for growth and when we adjust price we do it from a position of strength And you know this already, but I'll say it anyway, we evaluate pricing on a market-by-market basis, and we optimize for the long-term value of our platform. and you know this already but i'll say it anyway we evaluate pricing on a market-by-market basis and we optimize for the long-term value of our platform You've seen it in the last few years, we do not apply a one-size-fits-all approach to this. To your question, ultimately, what we strive to do is to always create more value than price. So... that happens while we're adjusting the price points as we go. This is the kind of value to price ratio we believe in. You've seen it in the last few years, we do not apply a one-size-fits-all approach to this. you've seen it in the last few years we do not apply a one-size-fits-all approach to this To your question, ultimately, what we strive to do is to always create more value than price. to your question ultimately what we strive to do is to always create more value than price So... that happens while we're adjusting the price points as we go. so that happens while we're adjusting the price points as we go This is the kind of value to price ratio we believe in. this is the kind of value to price ratio we believe in

Speaker 2: Okay, we've got another question from Rich Greenfield, this time on Spotify culture. Curious, what's changed at Spotify in the early days following Daniel stepping back from the CEO role? Okay, we've got another question from Rich Greenfield, this time on Spotify culture. okay we've got another question from rich greenfield this time on spotify culture Curious, what's changed at Spotify in the early days following Daniel stepping back from the CEO role? curious what's changed at spotify in the early days following daniel stepping back from the ceo role

Speaker 5: Well, this is Gustav. I'll take a stab at this. From one point of view, not that much has changed because we've kept growing market share and leading. But structurally, some things have changed because, first and foremost, Alex and I are two people. So we had two, two direct reporting teams, and we thought long and hard about how we were going to do that. Were we going to, to sort of split the thing down the middle, manage our own teams, have our own meetings? We decided not to. We decided to run this as a single direct reporting group. Something that we run weekly for three hours called E-team. So that changed. We focused even more on synchronization, than I think Daniel did. Well, this is Gustav. well this is gustav I'll take a stab at this. i'll take a stab at this From one point of view, not that much has changed because we've kept growing market share and leading. from one point of view not that much has changed because we've kept growing market share and leading But structurally, some things have changed because, first and foremost, Alex and I are two people. but structurally some things have changed because first and foremost alex and i are two people So we had two, two direct reporting teams, and we thought long and hard about how we were going to do that. so we had two two direct reporting teams and we thought long and hard about how we were going to do that Were we going to, to sort of split the thing down the middle, manage our own teams, have our own meetings? were we going to to sort of split the thing down the middle manage our own teams have our own meetings We decided not to. we decided not to We decided to run this as a single direct reporting group. we decided to run this as a single direct reporting group Something that we run weekly for three hours called E-team. something that we run weekly for three hours called e-team So that changed. so that changed We focused even more on synchronization, than I think Daniel did. we focused even more on synchronization than i think daniel did So we have the entire decision layer of Spotify, sort of the VP, SVP layer in this room, three hours every week, deciding and running and unblocking the entire company. There has been a shift in how we operate, and we focus even more on synchronization and planning. I want to touch on this, because in this age of AI, I think many companies are making a mistake. Maybe, maybe I shouldn't reveal this, but I will anyway. People feel like when you have AI, you don't need to plan anymore. I think it's actually going to be the opposite. When you have productivity on tap, what you need to have are very good plans so that these agents are highly utilized and stay busy. So we have the entire decision layer of Spotify, sort of the VP, SVP layer in this room, three hours every week, deciding and running and unblocking the entire company. so we have the entire decision layer of spotify sort of the vp svp layer in this room three hours every week deciding and running and unblocking the entire company There has been a shift in how we operate, and we focus even more on synchronization and planning. there has been a shift in how we operate and we focus even more on synchronization and planning I want to touch on this, because in this age of AI, I think many companies are making a mistake. i want to touch on this because in this age of ai i think many companies are making a mistake Maybe, maybe I shouldn't reveal this, but I will anyway. maybe maybe i shouldn't reveal this but i will anyway People feel like when you have AI, you don't need to plan anymore. people feel like when you have ai you don't need to plan anymore I think it's actually going to be the opposite. i think it's actually going to be the opposite When you have productivity on tap, what you need to have are very good plans so that these agents are highly utilized and stay busy. when you have productivity on tap what you need to have are very good plans so that these agents are highly utilized and stay busy Being a company that can plan well and know what you want to do, is actually going to become more important, not less important. Being a company that can plan well and know what you want to do, is actually going to become more important, not less important. being a company that can plan well and know what you want to do is actually going to become more important not less important

Speaker 1: So I, I'll lay into that a little bit. I think, this shift really began, you know, more than two years ago. It was carefully planned, and, you know, to Gustav's point, we now not only synchronize across the company with, with all of the different teams and, and, and their leaders, but we also set targets, and we land planes that are important. We are very deliberate about how we, target, and manage the outcome that we want for, for the company and our P&L and balance sheet. And, you know, if you look at the past three years, you've seen us compound revenue growth at 17% FX neutral. We have grown gross profit by 20% on a compounded basis for three years. So I, I'll lay into that a little bit. so i i'll lay into that a little bit I think, this shift really began, you know, more than two years ago. i think this shift really began you know more than two years ago It was carefully planned, and, you know, to Gustav's point, we now not only synchronize across the company with, with all of the different teams and, and, and their leaders, but we also set targets, and we land planes that are important. it was carefully planned and you know to gustav's point we now not only synchronize across the company with with all of the different teams and and and their leaders but we also set targets and we land planes that are important We are very deliberate about how we, target, and manage the outcome that we want for, for the company and our P&L and balance sheet. we are very deliberate about how we target and manage the outcome that we want for for the company and our p&l and balance sheet And, you know, if you look at the past three years, you've seen us compound revenue growth at 17% FX neutral. and you know if you look at the past three years you've seen us compound revenue growth at 17% fx neutral We have grown gross profit by 20% on a compounded basis for three years. we have grown gross profit by 20% on a compounded basis for three years What's more is that we have added 18 percentage points of operating margin, and we're now generating almost EUR 3 billion for 2025 in free cash flow, which is a 17% cash margin. All of us are super happy about this run, and we are definitely in a very strong position as a team to continue to invest and grow the future of Spotify. What's more is that we have added 18 percentage points of operating margin, and we're now generating almost EUR 3 billion for 2025 in free cash flow, which is a 17% cash margin. what's more is that we have added 18 percentage points of operating margin and we're now generating almost eur 3 billion for 2025 in free cash flow which is a 17% cash margin All of us are super happy about this run, and we are definitely in a very strong position as a team to continue to invest and grow the future of Spotify. all of us are super happy about this run and we are definitely in a very strong position as a team to continue to invest and grow the future of spotify

Speaker 2: All right, and another one on Rich Greenfield, this time about books. Can you help us understand why you want to be in the physical book-selling market? All right, and another one on Rich Greenfield, this time about books. all right and another one on rich greenfield this time about books Can you help us understand why you want to be in the physical book-selling market? can you help us understand why you want to be in the physical book-selling market

Speaker 5: Thanks, Rich. This is Gustav. The reason that we are in the— First of all, I want to say that we're not holding inventory or anything like that in this business. The reason we want to be in the physical book market is because we think that it's not a separate market, it is the same book market. So one of the most common feedbacks we heard when we talk about audiobooks was people saying that, "Yeah, I like it, but it's not enough. I really like reading at night or in the morning. Thanks, Rich. thanks rich This is Gustav. this is gustav The reason that we are in the— First of all, I want to say that we're not holding inventory or anything like that in this business. the reason that we are in the— first of all i want to say that we're not holding inventory or anything like that in this business The reason we want to be in the physical book market is because we think that it's not a separate market, it is the same book market. the reason we want to be in the physical book market is because we think that it's not a separate market it is the same book market So one of the most common feedbacks we heard when we talk about audiobooks was people saying that, "Yeah, I like it, but it's not enough. so one of the most common feedbacks we heard when we talk about audiobooks was people saying that "yeah i like it but it's not enough I really like reading at night or in the morning. i really like reading at night or in the morning I don't want to lie and listen to my audiobook in bed, because if I fall asleep, I miss it, et cetera." So we realized that while it technically and financially looks like a different market, we tend to focus on the consumer, and from the consumer, it's the same book, whether it's a physical book, it's on their Kindle or their audiobook. So this is what drove us to... It was really the consumer that drove us to enabling this as well. So that's how we think about it. We want to do books, and that requires being in physical books as well. It doesn't really matter if the consumer bought the book themselves and then sync to the audiobook, but we want to make it super easy. I don't want to lie and listen to my audiobook in bed, because if I fall asleep, I miss it, et cetera." So we realized that while it technically and financially looks like a different market, we tend to focus on the consumer, and from the consumer, it's the same book, whether it's a physical book, it's on their Kindle or their audiobook. i don't want to lie and listen to my audiobook in bed because if i fall asleep i miss it et cetera." so we realized that while it technically and financially looks like a different market we tend to focus on the consumer and from the consumer it's the same book whether it's a physical book it's on their kindle or their audiobook So this is what drove us to... so this is what drove us to It was really the consumer that drove us to enabling this as well. it was really the consumer that drove us to enabling this as well So that's how we think about it. so that's how we think about it We want to do books, and that requires being in physical books as well. we want to do books and that requires being in physical books as well It doesn't really matter if the consumer bought the book themselves and then sync to the audiobook, but we want to make it super easy. it doesn't really matter if the consumer bought the book themselves and then sync to the audiobook but we want to make it super easy If you find the book on Spotify, do not say that, "Well, I'm not going to listen to this book because I also want to read it." If that's the case, we're right there. You just click buy, it arrives in your home, and then you can sync it back and forth. So this is really a consumer-led innovation. If you find the book on Spotify, do not say that, "Well, I'm not going to listen to this book because I also want to read it." If that's the case, we're right there. if you find the book on spotify do not say that "well i'm not going to listen to this book because i also want to read it." if that's the case we're right there You just click buy, it arrives in your home, and then you can sync it back and forth. you just click buy it arrives in your home and then you can sync it back and forth So this is really a consumer-led innovation. so this is really a consumer-led innovation

Speaker 1: We're still bullish on audiobooks. There's so much upside there. You saw us launch audiobooks in Premium recently in Sweden, Denmark, Finland, Iceland, and Monaco. It's still very early days, but the publishers' reactions to our entrance into the market and the audience we attract and engage have been just super positive. You heard Gustav talk about audiobook recaps, Page Match now and the partnership with Bookshop. You know, in just two years, which is a very short order, we've more than tripled our catalog to over 500,000 titles and expanded into 14 global markets, and there are so many more markets to go from here. We're still bullish on audiobooks. we're still bullish on audiobooks There's so much upside there. there's so much upside there You saw us launch audiobooks in Premium recently in Sweden, Denmark, Finland, Iceland, and Monaco. you saw us launch audiobooks in premium recently in sweden denmark finland iceland and monaco It's still very early days, but the publishers' reactions to our entrance into the market and the audience we attract and engage have been just super positive. it's still very early days but the publishers' reactions to our entrance into the market and the audience we attract and engage have been just super positive You heard Gustav talk about audiobook recaps, Page Match now and the partnership with Bookshop. you heard gustav talk about audiobook recaps page match now and the partnership with bookshop You know, in just two years, which is a very short order, we've more than tripled our catalog to over 500,000 titles and expanded into 14 global markets, and there are so many more markets to go from here. you know in just two years which is a very short order we've more than tripled our catalog to over 500,000 titles and expanded into 14 global markets and there are so many more markets to go from here

Speaker 5: I just want to say that we talked about raising our ambition. Now, Alex and I want to do something different. We want to build something that never existed before, rather than trying to copy something that existed. And I think books is a good example of this. We're looking at a consumer problem that no one else really looked at and said, "This needs solving." We really want Spotify to be your media partner. If that requires us syncing to your physical book or your Kindle eBook, then let's just solve that. I just want to say that we talked about raising our ambition. i just want to say that we talked about raising our ambition Now, Alex and I want to do something different. now alex and i want to do something different We want to build something that never existed before, rather than trying to copy something that existed. we want to build something that never existed before rather than trying to copy something that existed And I think books is a good example of this. and i think books is a good example of this We're looking at a consumer problem that no one else really looked at and said, "This needs solving." We really want Spotify to be your media partner. we're looking at a consumer problem that no one else really looked at and said "this needs solving." we really want spotify to be your media partner If that requires us syncing to your physical book or your Kindle eBook, then let's just solve that. if that requires us syncing to your physical book or your kindle ebook then let's just solve that

Speaker 2: All right, our next question is going to come from Steven Cahall on AI opportunity and priorities. With the stock down approximately a third over the last three months, the market appears to be implying Spotify will be negatively impacted from AI. What do you think the market's missing from how Spotify can benefit from AI, and what are your top priorities so you don't fall behind within this new industry landscape? All right, our next question is going to come from Steven Cahall on AI opportunity and priorities. all right our next question is going to come from steven cahall on ai opportunity and priorities With the stock down approximately a third over the last three months, the market appears to be implying Spotify will be negatively impacted from AI. with the stock down approximately a third over the last three months the market appears to be implying spotify will be negatively impacted from ai What do you think the market's missing from how Spotify can benefit from AI, and what are your top priorities so you don't fall behind within this new industry landscape? what do you think the market's missing from how spotify can benefit from ai and what are your top priorities so you don't fall behind within this new industry landscape

Speaker 3: Hi, Steven. Christian here. Let me start and then hand over to Gustav, but I think it's been notable, listening to today's discussion and also seeing the last quarter. Of course, that AI has been something that has been hard to grasp for many people. We don't comment on our share price, when it changes, like in this short term and so on, we will not do that going forward. Hi, Steven. hi steven Christian here. christian here Let me start and then hand over to Gustav, but I think it's been notable, listening to today's discussion and also seeing the last quarter. let me start and then hand over to gustav but i think it's been notable listening to today's discussion and also seeing the last quarter Of course, that AI has been something that has been hard to grasp for many people. of course that ai has been something that has been hard to grasp for many people We don't comment on our share price, when it changes, like in this short term and so on, we will not do that going forward. we don't comment on our share price when it changes like in this short term and so on we will not do that going forward But it's obvious from the recent months, but also from the discussion today, I would say, in all the questions we get, that AI is something that is interesting and will have an impact. And I think, hopefully, we have discussed and explained why this is a great opportunity for us. And as Gustav said before, we didn't start now, we started many years ago, and if you haven't, you probably will have a tougher time. And that's why we think this is a great opportunity. I hand it over to you, Gustav. But it's obvious from the recent months, but also from the discussion today, I would say, in all the questions we get, that AI is something that is interesting and will have an impact. but it's obvious from the recent months but also from the discussion today i would say in all the questions we get that ai is something that is interesting and will have an impact And I think, hopefully, we have discussed and explained why this is a great opportunity for us. and i think hopefully we have discussed and explained why this is a great opportunity for us And as Gustav said before, we didn't start now, we started many years ago, and if you haven't, you probably will have a tougher time. and as gustav said before we didn't start now we started many years ago and if you haven't you probably will have a tougher time And that's why we think this is a great opportunity. and that's why we think this is a great opportunity I hand it over to you, Gustav. i hand it over to you gustav

Speaker 5: I won't say that much more, but Alex here told me that the Chinese sign for macro wind is opportunity. So we're going to try to capture that opportunity. I wanna be clear, so we're going to invest, but we're going to invest with discipline when we see clear opportunities and returns. I won't say that much more, but Alex here told me that the Chinese sign for macro wind is opportunity. i won't say that much more but alex here told me that the chinese sign for macro wind is opportunity So we're going to try to capture that opportunity. so we're going to try to capture that opportunity I wanna be clear, so we're going to invest, but we're going to invest with discipline when we see clear opportunities and returns. i wanna be clear so we're going to invest but we're going to invest with discipline when we see clear opportunities and returns

Speaker 2: Right. Yeah, Gustav. Funny. All right, we've got a question now from Doug Anmuth on our new free tier. When should Spotify see easing headwinds to subscriber conversions from the recent free tier announcements, with a shift towards increasing conversions and subscribers? How does this impact the trajectory of both 2026 MAU and Premium subs? Right. right Yeah, Gustav. yeah gustav Funny. funny All right, we've got a question now from Doug Anmuth on our new free tier. all right we've got a question now from doug anmuth on our new free tier When should Spotify see easing headwinds to subscriber conversions from the recent free tier announcements, with a shift towards increasing conversions and subscribers? when should spotify see easing headwinds to subscriber conversions from the recent free tier announcements with a shift towards increasing conversions and subscribers How does this impact the trajectory of both 2026 MAU and Premium subs? how does this impact the trajectory of both 2026 mau and premium subs

Speaker 1: Well, Doug, we just came off of a really good quarter when it comes to both MAU and Premium subs, so I'm very, very encouraged about the 2026 growth of these two metrics. You know, we are seeing strong engagement uplifts, not just in our new enhanced free tier around the world, but also generally for Spotify. And this was one of the major contributors to us adding 38 million users in Q4. You know, when you fix the. It's sort of like a leaky bucket. When you start, you know, plugging the holes, the level of the water will just rise faster. And this is perhaps the most important leading indicator to growth at Spotify. It's been so in the past 15, 16 years that I've been here. Well, Doug, we just came off of a really good quarter when it comes to both MAU and Premium subs, so I'm very, very encouraged about the 2026 growth of these two metrics. well doug we just came off of a really good quarter when it comes to both mau and premium subs so i'm very very encouraged about the 2026 growth of these two metrics You know, we are seeing strong engagement uplifts, not just in our new enhanced free tier around the world, but also generally for Spotify. you know we are seeing strong engagement uplifts not just in our new enhanced free tier around the world but also generally for spotify And this was one of the major contributors to us adding 38 million users in Q4. and this was one of the major contributors to us adding 38 million users in q4 You know, when you fix the. you know when you fix the It's sort of like a leaky bucket. it's sort of like a leaky bucket When you start, you know, plugging the holes, the level of the water will just rise faster. when you start you know plugging the holes the level of the water will just rise faster And this is perhaps the most important leading indicator to growth at Spotify. and this is perhaps the most important leading indicator to growth at spotify It's been so in the past 15, 16 years that I've been here. it's been so in the past 15 16 years that i've been here If engagement goes up, it means user growth will increase, and ultimately, this has downstream impact on the overall Spotify business, including subscribers and other monetization. If engagement goes up, it means user growth will increase, and ultimately, this has downstream impact on the overall Spotify business, including subscribers and other monetization. if engagement goes up it means user growth will increase and ultimately this has downstream impact on the overall spotify business including subscribers and other monetization

Speaker 2: All right. Thanks, Doug. Another question from Justin Patterson for Gustav on AI: How is agentic coding changing product velocity? What do you believe GenAI could mean for engineer productivity and R&D investment needs? All right. all right Thanks, Doug. thanks doug Another question from Justin Patterson for Gustav on AI: How is agentic coding changing product velocity? another question from justin patterson for gustav on ai how is agentic coding changing product velocity What do you believe GenAI could mean for engineer productivity and R&D investment needs? what do you believe genai could mean for engineer productivity and r&d investment needs

Speaker 5: Thanks for the question, Justin. Well, I would say that I, I think it's obvious to everyone, but over Christmas, Christmas this year was an event, a singular event in terms of AI productivity. Certainly, I spent my entire vacation coding rather than being on holiday, and I think most people in tech did. A lot of things happened in December, including, Opus 4.5 coming out, with the Claude Code, and we crossed the threshold where things just started working. So a lot has actually changed very recently, and when I speak to my most senior engineers, the best developers we had, they actually say that they haven't written a single line of code since December. They actually only generate code and supervise it. Thanks for the question, Justin. thanks for the question justin Well, I would say that I, I think it's obvious to everyone, but over Christmas, Christmas this year was an event, a singular event in terms of AI productivity. well i would say that i i think it's obvious to everyone but over christmas christmas this year was an event a singular event in terms of ai productivity Certainly, I spent my entire vacation coding rather than being on holiday, and I think most people in tech did. certainly i spent my entire vacation coding rather than being on holiday and i think most people in tech did A lot of things happened in December, including, Opus 4.5 coming out, with the Claude Code, and we crossed the threshold where things just started working. a lot of things happened in december including opus 4.5 coming out with the claude code and we crossed the threshold where things just started working So a lot has actually changed very recently, and when I speak to my most senior engineers, the best developers we had, they actually say that they haven't written a single line of code since December. so a lot has actually changed very recently and when i speak to my most senior engineers the best developers we had they actually say that they haven't written a single line of code since december They actually only generate code and supervise it. they actually only generate code and supervise it It is a big change, it is real, and it's happening fast. Now, as I said, we've discussed for the last, at least one a half years, not if this should happen, but when it should happen. We've started building systems like Honk, I explained, for this type of world. I feel very well positioned to capture this. I wanna be clear, this is the beginning of the change. There is going to have to be a lot of change in these tech companies if you wanna stay competitive, and we are absolutely hell-bent on leading that change. It will be painful for many companies, because I think engineering practices, product practices, and design practices will change. It is a big change, it is real, and it's happening fast. it is a big change it is real and it's happening fast Now, as I said, we've discussed for the last, at least one a half years, not if this should happen, but when it should happen. now as i said we've discussed for the last at least one a half years not if this should happen but when it should happen We've started building systems like Honk, I explained, for this type of world. we've started building systems like honk i explained for this type of world I feel very well positioned to capture this. i feel very well positioned to capture this I wanna be clear, this is the beginning of the change. i wanna be clear this is the beginning of the change There is going to have to be a lot of change in these tech companies if you wanna stay competitive, and we are absolutely hell-bent on leading that change. there is going to have to be a lot of change in these tech companies if you wanna stay competitive and we are absolutely hell-bent on leading that change It will be painful for many companies, because I think engineering practices, product practices, and design practices will change. it will be painful for many companies because i think engineering practices product practices and design practices will change And the tricky thing right now is that if this was the end of the change, you could say, this is what happened, now let's, let's, retool for this. The tricky thing is that we're in the middle of the change, so you also have to be very agile. The things you build now may be useless in a month, because it may be provided by one of the, one of the big engines, et cetera. On the other hand, it's getting so cheap to write code, so you should probably do it anyway. So, I think what it's going to mean at the end of the day is that software companies will start producing enormously more amount of software, right? If you go back to. There is this fear that software companies are not gonna exist anymore, everyone rolls their own products. And the tricky thing right now is that if this was the end of the change, you could say, this is what happened, now let's, let's, retool for this. and the tricky thing right now is that if this was the end of the change you could say this is what happened now let's let's retool for this The tricky thing is that we're in the middle of the change, so you also have to be very agile. the tricky thing is that we're in the middle of the change so you also have to be very agile The things you build now may be useless in a month, because it may be provided by one of the, one of the big engines, et cetera. the things you build now may be useless in a month because it may be provided by one of the one of the big engines et cetera On the other hand, it's getting so cheap to write code, so you should probably do it anyway. on the other hand it's getting so cheap to write code so you should probably do it anyway So, I think what it's going to mean at the end of the day is that software companies will start producing enormously more amount of software, right? so i think what it's going to mean at the end of the day is that software companies will start producing enormously more amount of software right If you go back to. if you go back to There is this fear that software companies are not gonna exist anymore, everyone rolls their own products. there is this fear that software companies are not gonna exist anymore everyone rolls their own products I certainly don't think that's going to be true for consumer products. I think what will happen is something more like what happened with the Internet. When the Internet came along, everyone thought that we would all have our own web pages. What actually happened was there ended up being very few web pages. In times of lower friction, things actually tend to aggregate, not disaggregate. That's the opportunity we see in front of us. I think companies such as us are simply going to produce massively more software, up until our limiting factor is actually the amount of change that consumers are comfortable with. I certainly don't think that's going to be true for consumer products. i certainly don't think that's going to be true for consumer products I think what will happen is something more like what happened with the Internet. i think what will happen is something more like what happened with the internet When the Internet came along, everyone thought that we would all have our own web pages. when the internet came along everyone thought that we would all have our own web pages What actually happened was there ended up being very few web pages. what actually happened was there ended up being very few web pages In times of lower friction, things actually tend to aggregate, not disaggregate. in times of lower friction things actually tend to aggregate not disaggregate That's the opportunity we see in front of us. that's the opportunity we see in front of us I think companies such as us are simply going to produce massively more software, up until our limiting factor is actually the amount of change that consumers are comfortable with. i think companies such as us are simply going to produce massively more software up until our limiting factor is actually the amount of change that consumers are comfortable with

Speaker 2: All right, we've got time for just a, a few more questions. We're gonna go now to Steven Cahall on gross margin. With premium ARPU set to accelerate for much of 2026, how should we think about premium and total margin expansion? Your Q1 margin guide already implies improvement versus the typical seasonality, so can we expect a stronger year for margin expansion than we saw in 2025? All right, we've got time for just a, a few more questions. all right we've got time for just a a few more questions We're gonna go now to Steven Cahall on gross margin. we're gonna go now to steven cahall on gross margin With premium ARPU set to accelerate for much of 2026, how should we think about premium and total margin expansion? with premium arpu set to accelerate for much of 2026 how should we think about premium and total margin expansion Your Q1 margin guide already implies improvement versus the typical seasonality, so can we expect a stronger year for margin expansion than we saw in 2025? your q1 margin guide already implies improvement versus the typical seasonality so can we expect a stronger year for margin expansion than we saw in 2025

Speaker 3: So, thank you, Steven. As you know, which I've said already, we don't give full year guidance on our Gross Margin. But you're right. I mean, we move into quarter one with an ARPA growth of 5%-6%. That's a bit faster than we have reported in quarter four, and it incorporates recently announced price increases in the market like U.S. and that will flow through our P&L for portion of the quarter and will improve a bit. But that said, we have said it repeatedly, and I will say it again, which is very important, except for that we're not guiding on full year, full year Gross Margin, is that we actually do invest when we see an opportunity for long-term value. So, thank you, Steven. so thank you steven As you know, which I've said already, we don't give full year guidance on our Gross Margin. as you know which i've said already we don't give full year guidance on our gross margin But you're right. but you're right I mean, we move into quarter one with an ARPA growth of 5%-6%. i mean we move into quarter one with an arpa growth of 5%-6% That's a bit faster than we have reported in quarter four, and it incorporates recently announced price increases in the market like U.S. and that will flow through our P&L for portion of the quarter and will improve a bit. that's a bit faster than we have reported in quarter four and it incorporates recently announced price increases in the market like u.s and that will flow through our p&l for portion of the quarter and will improve a bit But that said, we have said it repeatedly, and I will say it again, which is very important, except for that we're not guiding on full year, full year Gross Margin, is that we actually do invest when we see an opportunity for long-term value. but that said we have said it repeatedly and i will say it again which is very important except for that we're not guiding on full year full year gross margin is that we actually do invest when we see an opportunity for long-term value That said, the quarterly progression of our margins could again be variable, depending on the timing of disciplined investments in our core and the monetization activities that I just mentioned. So keep that in mind, and as we say, we do believe that gross margin and operating margin will improve in 2026. That said, the quarterly progression of our margins could again be variable, depending on the timing of disciplined investments in our core and the monetization activities that I just mentioned. that said the quarterly progression of our margins could again be variable depending on the timing of disciplined investments in our core and the monetization activities that i just mentioned So keep that in mind, and as we say, we do believe that gross margin and operating margin will improve in 2026. so keep that in mind and as we say we do believe that gross margin and operating margin will improve in 2026

Speaker 2: All right, our last question is going to come from Batya Levi. Also related to AI opportunity. Back in October, you had announced partnership with the major labels to develop artist-first AI products. With all the hype about competition and disruption, can you talk about how you plan to differentiate with these products, and is there an urgency to launch them? All right, our last question is going to come from Batya Levi. all right our last question is going to come from batya levi Also related to AI opportunity. also related to ai opportunity Back in October, you had announced partnership with the major labels to develop artist-first AI products. back in october you had announced partnership with the major labels to develop artist-first ai products With all the hype about competition and disruption, can you talk about how you plan to differentiate with these products, and is there an urgency to launch them? with all the hype about competition and disruption can you talk about how you plan to differentiate with these products and is there an urgency to launch them

Speaker 5: This is Gustav. I'll start, and maybe Alex wants to jump in. No, we're not going to ship ideas. We're not going to ship what we're going to do in the future. That wouldn't be very good for all of you shareholders. But what I will tell you is that, as I said in my prepared remarks, we think of it in two ways: net new music and derivatives. In terms of net new music, there are tons of companies that allow you to create music using AI, but that's not where the music breaks. That music, if it breaks, breaks on Spotify, that's where it charts, that's where the cultural moment is. So we feel very comfortable about that position. A growing catalog has always been good for Spotify. This is Gustav. this is gustav I'll start, and maybe Alex wants to jump in. i'll start and maybe alex wants to jump in No, we're not going to ship ideas. no we're not going to ship ideas We're not going to ship what we're going to do in the future. we're not going to ship what we're going to do in the future That wouldn't be very good for all of you shareholders. that wouldn't be very good for all of you shareholders But what I will tell you is that, as I said in my prepared remarks, we think of it in two ways: net new music and derivatives. but what i will tell you is that as i said in my prepared remarks we think of it in two ways net new music and derivatives In terms of net new music, there are tons of companies that allow you to create music using AI, but that's not where the music breaks. in terms of net new music there are tons of companies that allow you to create music using ai but that's not where the music breaks That music, if it breaks, breaks on Spotify, that's where it charts, that's where the cultural moment is. that music if it breaks breaks on spotify that's where it charts that's where the cultural moment is So we feel very comfortable about that position. so we feel very comfortable about that position A growing catalog has always been good for Spotify. a growing catalog has always been good for spotify Now, in terms of the derivatives, as I said, we think this is an untapped opportunity for artists to make money off of their existing IP. We have the technology and capabilities that we need, and we're very excited about it, and we are ready for the partners that are hungry to seize this opportunity. We think the ones that move first will benefit the most. So we're hungry and excited. We're not particularly stressed about it, but we're there for people who want to make money. Now, in terms of the derivatives, as I said, we think this is an untapped opportunity for artists to make money off of their existing IP. now in terms of the derivatives as i said we think this is an untapped opportunity for artists to make money off of their existing ip We have the technology and capabilities that we need, and we're very excited about it, and we are ready for the partners that are hungry to seize this opportunity. we have the technology and capabilities that we need and we're very excited about it and we are ready for the partners that are hungry to seize this opportunity We think the ones that move first will benefit the most. we think the ones that move first will benefit the most So we're hungry and excited. so we're hungry and excited We're not particularly stressed about it, but we're there for people who want to make money. we're not particularly stressed about it but we're there for people who want to make money

Speaker 2: All right. Thanks, Gustav, and thanks, Batya. That concludes our Q&A session. I'm going to turn the call over now to Alex for some concluding remarks. All right. all right Thanks, Gustav, and thanks, Batya. thanks gustav and thanks batya That concludes our Q&A session. that concludes our q&a session I'm going to turn the call over now to Alex for some concluding remarks. i'm going to turn the call over now to alex for some concluding remarks

Speaker 1: Thank you, Bryan. From any vantage point at Spotify, there is a lot to look forward to. In March, we'll kick off our 20th anniversary at South by Southwest, and we are excited to share more about our year of raising ambition and a longer-term vision at our Investor Day on May 21 of this year in New York. Please hold the date. Gustav, Christian, and I are looking forward to seeing you there. Thank you, Bryan. thank you bryan From any vantage point at Spotify, there is a lot to look forward to. from any vantage point at spotify there is a lot to look forward to In March, we'll kick off our 20th anniversary at South by Southwest, and we are excited to share more about our year of raising ambition and a longer-term vision at our Investor Day on May 21 of this year in New York. in march we'll kick off our 20th anniversary at south by southwest and we are excited to share more about our year of raising ambition and a longer-term vision at our investor day on may 21 of this year in new york Please hold the date. please hold the date Gustav, Christian, and I are looking forward to seeing you there. gustav christian and i are looking forward to seeing you there

Speaker 2: Right. That concludes today's call. A replay will be available on our website and also on the Spotify app under Spotify Earnings Call Replays. Thanks, everyone, for joining. Right. right That concludes today's call. that concludes today's call A replay will be available on our website and also on the Spotify app under Spotify Earnings Call Replays. a replay will be available on our website and also on the spotify app under spotify earnings call replays Thanks, everyone, for joining. thanks everyone for joining