--- title: "Spotify（Minutes）：Business growth is non-linear, not in a hurry to enter the next round of price increases" description: "Below is the earnings call Minutes for Spotify FY25 Q1. For Quick Interpretation of the earnings report, please refer to《Spotify: Minor Flaws Don't Alter the Big Trend, High Valuation Faces Sentiment " type: "topic" locale: "en" url: "https://longbridge.com/en/topics/29254846.md" published_at: "2025-04-30T10:32:49.000Z" author: "[Dolphin Research](https://longbridge.com/en/news/dolphin.md)" --- # Spotify（Minutes）：Business growth is non-linear, not in a hurry to enter the next round of price increases **Below is**$Spotify(SPOT.US) **FY25 Q1 earnings call Minutes, for financial report analysis please refer to《**[**Spotify: Minor Flaws Don't Alter the Major Trend, High Valuation Faces Sentiment Slaughter**](Spotify%EF%BC%9A%E5%B0%8F%E7%91%95%E7%96%B5%E4%B8%8D%E6%94%B9%E5%A4%A7%E8%B6%8B%E5%8A%BF%EF%BC%8C%E9%AB%98%E4%BC%B0%E5%80%BC%E9%81%AD%E9%81%87%E6%83%85%E7%BB%AA%E6%9D%80)**》** **1\. Key Financial Highlights Recap** 1\. Monthly Active Users (MAU) and Subscribers: MAU increased by 3 million to 678 million, with net subscriber growth of 5 million, reaching 268 million total subscribers, up 12% YoY. 2\. Revenue: Total revenue reached €4.2 billion, up 15% YoY at constant currency. Premium subscription revenue grew 16% YoY at constant currency, driven by subscriber growth and ARPU increase from price hikes. Ad revenue grew 5% YoY on a currency-neutral basis. 3\. Gross Margin: Reached 31.6%, ~10bps above expectations and up ~400bps YoY, primarily benefiting from better-than-expected podcast ad performance and slight content cost adjustments. 4\. Operating Profit: €509 million, benefiting from gross margin expansion. However, the quarter was impacted by €76 million in unexpected social burden costs, €58 million above expectations. Excluding these, operating profit exceeded expectations by €18 million. 5\. Free Cash Flow: Quarterly FCF reached €534 million, driven by operating profit growth and working capital improvements. The company ended the quarter with €8 billion in cash and short-term investments. 6\. Q2 Outlook: Expects MAU of 689 million (+11 million QoQ) and subscribers of 273 million (+5 million QoQ). Projects total revenue of €4.3 billion, though currency fluctuations may create ~€100 million headwind. Forecasts 31.5% gross margin and €539 million operating profit. 7\. Full-Year Margin Outlook: Expects steady 2025 margin expansion at a more moderate pace than 2024, with strategic investments to accelerate long-term growth targets. Anticipates more volatile quarterly gross margin trends, with seasonal strength in Q4. **2\. Earnings Call Details** **2.1 Management Commentary Highlights** 1\. Performance Review: Expressed satisfaction with subscriber growth exceeding expectations. Despite macroeconomic uncertainty, emphasized strong positioning and long-term confidence. Spotify's freemium model ensures service continuity during economic volatility. 2\. Strategy Execution: Committed to core strategy of delivering best user/creator experiences. 2025 focuses on accelerated execution - AI-driven process improvements reduced feature deployment time by 10x across 2000+ partner devices. The Spotify Partner Program (launched January, expanded to 9 new markets) drove 44% increase in video content consumption, with $100M+ paid to podcast creators in Q1. Audiobook expansion enhanced engagement. 3\. Market Performance: Emerging markets contributed 2/3 of subscriber beat, with standout growth in LatAm and APAC. Developed markets showed steady growth. 4\. Advertising: Automation tools attracted 21% more advertisers YoY (10,000+ in Q1), with active advertisers exceeding Q4 levels for the first time. **2.2 Q&A** **Q: Will Q4 2025 remain the gross margin peak? Given MAU adds within historical range, should marketing spend increase?** **A:** Expect more variability but seasonal Q4 strength. Marketing spend won't exceed 2024 levels. **Q: Update on superfan product development timeline?** **A:** Focused on enhancing premium tier value. Segmentation represents long-term opportunity but not near-term growth dependency. **Q: AI adoption progress?** **A:** Since 2018's "ML-as-product" strategy, AI now enables real-time interaction (e.g., voice playlist feature in 40 markets). Internal tools accelerate coding/prototyping. Next focus: planning processes. **Q: Economics of $100M podcast creator payments?** **A:** Aligns with forecasts. Key KPI: engagement depth across content formats driving retention. **Q: Ad business commentary amid programmatic demand growth?** **A:** Unified ad stack expanded client base from thousands to tens of thousands via diversified channels. **Q: Record subscriber adds despite lower marketing spend?** **A:** Value-price ratio improvements outweigh marketing efficiency gains. Organic initiatives like FC Barcelona partnership helped. **Q: Countercyclical Spotify Partner Program investment strategy?** **A:** Creator content volume directly correlates with user engagement - guides investment levels. **Q: Video content potential beyond podcasts?** **A:** No structural barriers. Music videos gaining traction alongside podcast videos. **Q: Full impact of UMG/Warner renewals reflected?** **A:** All IFRS-compliant contractual effects captured. **Q: Next audiobook growth catalysts?** **A:** AI-powered discovery and 11labs collaboration for multilingual content. **Q: Pricing opportunity after modest historical increases?** **A:** Early growth phase prioritized adoption. Future segmentation offers significant potential. **Q: €8B cash deployment priorities?** **A:** Growth opportunities remain primary focus. Shareholder returns considered when excess cash available. **Q: 20% constant-currency revenue growth target viability?** **A:** Historical precedent shows nonlinear growth patterns. Q4 typically delivers outperformance. **Q: Industry relationships and pricing/margin outlook?** **A:** Strong alignment with partners on music ecosystem growth. **Q: Ad-supported user decline drivers?** **A:** Post-Wrapped churn and emerging market conversion rate improvements (positive for subs, mixed for MAU). **Q: Mid-tier ad-supported subscription feasibility?** **A:** Current "value map" shows limited incremental benefit versus complexity. **Q: Growth vs. margin balance?** **A:** LTV/SAC analysis guides investment decisions. Current thresholds higher than historical. **Disclosures:**[**Dolphin Research Disclaimer**](https://support.longbridge.global/topics/misc/dolphin-disclaimer) ### Related Stocks - [SPOT.US - Spotify](https://longbridge.com/en/quote/SPOT.US.md) --- > **Disclaimer**: This article is for reference only and does not constitute any investment advice.