Spotify Technology SA (NYSE: SPOT) Q4 2021 Earnings Highlights
Daniel Ek, CEO:
“…With 120 million users, we saw unprecedented engagement up 29% year-over-year, with the highest levels coming from the Gen Z audience. And on launch day, Wrapped was the #1 worldwide trending topic on both Twitter and TikTok proving that it’s more of a cultural phenomenon than ever before.
Ads, well, it continued its remarkable growth trajectory turning in 40% growth year-over-year. Advertising is showing more proof points of being the second key revenue driver for the overall business, climbing to a record 15% of our total revenues this quarter. And while the ad business is more prone to seasonal blips, I see this momentum continuing in 2020 and beyond. And as a result of this strong performance, we will continue to test different windowing strategies for our exclusive podcast partnerships to get the advantage of that broader audience reach.
Q4 also saw strong performance across podcast metrics, and we’ve amassed highly engaged audience that is listening more than ever. And last quarter, we confirmed that Spotify had become the #1 podcast platform U.S. listeners used the most, and we continue to see meaningful market share gains. So overall, I’m feeling very good about 2022.
But let’s move to the long term, which is where I try to focus my time. We are building a category-defining company, and this takes patience. And some may still describe us as the leading music subscription service. And while this surely reflects where we’ve been, it doesn’t encompass all the advancements we’ve been making in the audio. And further, I don’t think it properly captures all the future initiatives that we’re working on either. It is, as Jim Barkell [ph] described, it’s constantly about bundling and unbundling on the Internet.
So what are we focused on then? Well, the best way to describe it is a subset of the creator economy. People have been talking about the creator economy for some time and it has taken on many different meanings. For us, the single largest trend to keep track of is the rapid professionalization of creators. And I see this as one of the biggest opportunities on the Internet.
And for all the millions of artists and creators that have leveraged Spotify to date, I think we’ve only scratched the surface of the creative potential in audio. To become the preferred destination for audio creators, we will accelerate the move from a one-size-fits-all model to a much more dynamic and open platform. And we will give them greater flexibility and the power to be more entrepreneurial, which will, of course, unlock the extraordinary potential of their business and communities.
We will provide greater reach. We will provide tools and access to diverse revenue streams that can be personalized to meet the needs of each creator. I believe this will all lead to the creation of millions of jobs for the creator economy. And while this is not limited to Spotify, we are building the platform that will enable the whole ecosystem to work together on a global scale. And we think that the Spotify ecosystem alone will encompass more than 50 million active creators, which is a significant increase from the 11 million total that we have today.
So think of it as 50 million small- and medium-sized businesses that we can support by giving them the infrastructure and resources to grow. And this evolution will take time, but I know some of you are wondering what this means in the near term. And the work there is already well underway.
This opportunity started to crystalize for me around our acquisition of Anchor with increasing momentum. It was clear to me from the feedback we heard that Anchor creators wanted more flexibility and more options to do business. And one recent example of this includes the Spotify Open Access platform. We brought it to market last year to enable creators with existing paid content businesses to activate their subscriber base on Spotify. And this means those creators, whether they’re an independent podcaster, a major news outlet, an audio book publisher or creator platform can retain full control over their subscription base while leveraging the reach of Spotify to grow their audience.
And based on the early success, you should expect us to continue to invest in ever-growing number of tools, resources and services for a broad range of creators to bring them to market. While many will be competing to seize a piece of this opportunity, I believe that we’re uniquely well positioned to adapt to this changing environment and deliver for the good of the entire audio creator ecosystem…”