Good morning, and welcome to Spotify's fourth quarter 2022 earnings conference call and webcast. All participants are in a listen-only mode. If you require operator assistance at any time, please press star 0. 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, Mr. Goldberg. Thanks, operator, and welcome to Spotify's fourth quarter 2022 earnings conference call. Joining us today will be Daniel Ek, our CEO, and Paul Vogel, our CFO. We'll start with opening comments from Daniel and Paul, 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 SpotifyEarningsQ422. Analysts can ask questions directly into Slido, and all participants can then vote on the questions they find the most relevant. We ask that you try to limit yourself to one to two questions, and to the extent you've got follow-ups, we'll be happy to address them time permitting. If for some reason you don't have access to Slido, you can email investor relations at ir@spotify.com and we'll add in your questions. Before I 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 materially differ because of factors discussed on today's call, in our letter to shareholders, 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 letter to shareholders, 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 Happy New Year, and thanks for joining us. We had a great Q4 and ended 2022 strongly. Our user and subscriber numbers continued to climb, showing the value of our investments in the platform over the past few years. We're now in an even stronger competitive position, and I'm confident in our future prospects. I'll let Paul fill you in on more of the specific details. However, a notable call-out in the quarter was our eighth annual Wrapped campaign, which was a big contributor to our Q4 success. We broke all sorts of records and reached several all-time highs with an increase of over 30% in user engagement. Wrapped was trending all over social media, but it wasn't just about Wrapped. By the end of the year, we had more than 100 million tracks on our platform and more than 5 million podcasts and more than 300,000 audiobooks being enjoyed by almost half a billion listeners. In 2021, we said that 2022 would be an investment year, and it was. In light of our recent news on cost and staff reductions, I'm sure some of you are wondering if we believe that investment was a mistake. The answer is no and yes. I still believe it was the right call to invest, and I would do it again. For instance, in the last 12 months, we grew our users substantially, enhanced our capabilities, developed a better product, and brought more content to creators and users around the world. We also made tremendous strides in setting Spotify apart from everyone else in our space. In addition, my expectation was never that these investments would have great impact in the short term, yet they have. More importantly for our shareowners, I fully expect that they will continue to pay dividends in the months and years to come. Things change, and the macro environment has changed significantly in the last year. In hindsight, I probably got a little carried away and overinvested relative to the uncertainty we saw shaping up in the market. We are shifting the focus on tightening our spend and becoming more efficient. This remains consistent with the plan we outlined at Investor Day, but you should expect us to execute on it with even greater intensity, given what I just said. However, to be clear, this doesn't mean we're changing our strategy. We will continue to work to build a platform of the future, and that will take investment in new opportunities that we outlined, like podcasts and audiobooks. If anything, thanks to our position in users and subs, this should allow us to both increase revenue per user over time as well as improve our stickiness with consumers even more. Going forward, we will do it with an intense focus on efficiency, and that marks a pretty big shift in how we will act. To meet this objective, we are also rethinking how we operate. We've set up a new org structure that streamlines decision-making and prioritizes speed and efficiency. 2023 marks a new chapter for us, but our commitment to achieving our goals remains the same. I'm really optimistic about the direction we're headed in and will continue to focus my efforts on guiding the long-term success of the company. With that, I'll hand it over to Paul to go deeper into the numbers, and then Bryan will open it up to the Q&A. Thanks, Daniel, and thanks, everyone, for joining us. I'd like to add a bit more color on the quarter and then touch upon the broader performance of the business and our outlook. Let's start with Q4. User growth was very strong in the quarter. Total monthly active users grew to 489 million in Q4. This was 10 million ahead of guidance, up 33 million quarter-over-quarter, and the largest Q4 net additions in our history. Moving to Premium, we finished the quarter with 205 million subscribers, 3 million ahead of guidance, thanks to broad-based strength across several regions, particularly Latin America. Our revenue grew 18% year-on-year to approximately $3.2 billion in the quarter. Reported results were aided by a 600 basis point currency benefit. This was 200 basis points less than forecast. While reported revenue was a touch below forecast, our organic growth on a currency-neutral basis modestly outperformed due primarily to advertising. Turning to gross margin. Gross margin of 25.3% was above guidance by 80 basis points due primarily to lower podcast content spend, along with broad-based favorability in our core music business, led by strength in Marketplace. Moving to operating expenses, growth in the quarter was lower than forecast, due mainly to currency movements and, to a lesser degree, lower marketing spending. Combined with our better gross profit, our operating loss was ahead of guidance by $69 million. As we previewed last quarter, free cash flow was negative in Q4 due primarily to timing shifts around certain payments. We continue to generate roughly $200 million in free cash flow on a trailing twelve-month basis. We expect to be free cash flow positive for the full year of 2023. Looking ahead, we are pleased with our momentum into 2023. Combined with our increased focus on speed and efficiency, we are confident in our ability to continue our double-digit top-line trajectory in conjunction with improvements in profitability. With respect to first quarter guidance, we continue to see strong momentum in MAU and anticipate reaching half a billion users by the end of Q1. On the subscriber front, we expect to add about 2 million net subscribers, bringing total subscribers to 207 million. We're also forecasting $3.1 billion in total revenue, a gross margin of roughly 25% excluding severance charges, and an operating loss of $194 million, with the latter reflecting $35 million-$45 million in severance charges within our operating expenses. While we no longer give full year guidance, full year 2023, we see strong growth for both users and subs. We are feeling good about the momentum exiting 2022. Gross margin and operating expenses are expected to improve throughout the year, as we have mentioned previously, while free cash flow is expected to be in line with historic averages. Given many of the adjustments we made at the start of 2023, including our decision to reduce our workforce by 6%, we see our operating expenses growing slower with a material improvement in our operating loss compared with 2022. This is according to plan, but as Daniel mentioned, we are entering a new era with even more focus. With that, I'll hand things back to Bryan for Q&A. Thanks, Paul. Again, if you've got any questions, please go to slido.com, hashtag SpotifyEarningsQ422. We'll be reading the questions in the order they appear in the queue with respect to how people vote up their preference for questions. Our first question today is going to come from Matt Thornton on subscribers and pricing. Has Spotify seen any lift to subscribers from recent competitor price increases? If not, does this give Spotify increased confidence to take price? What are the reasons, if any, Spotify would not take price? I'll take this and feel free to chime in, Paul. I think the most thing, if we up level this is, our priority is to grow revenue as fast as we possibly can. When we look at a market, there's generally two strategies we can do that. One of those strategies would be to grow the number of people that we can attract to join our platform, and the second strategy would be to increase the revenue per user that we already have on the platform. Generally, our approach when we're early in a market is to try to grow the number of participants on the platform. The usual way to do that is not to try to increase prices too early, but keep a competitive price that attracts the most amount of users onto the platform. As the market matures, then obviously, it'll shift more so that most of the revenue growth comes from price increases. To put things in context, in 2022, we increased our price point in more than 40 markets around the world. It's definitely something that we're doing, and we're looking at it as a balanced portfolio approach, where in some markets we're selectively increasing prices because we're in a more mature place. In some markets, we're mostly focused on growth. That's our general approach. I don't have anything specific to announce at this point, but we're constantly discussing with our rights holder partners around various price increases that we would be doing. We would always look at what's net beneficial to our business in growing the revenue and growing the profitability in each market we're in. Yeah, I would just add, in terms of just the subs outperformance in Q4, it was pretty broad-based. It was broad-based globally. It was broad-based by product. We had strength, Premium Family and Premium Duo. We had, outperformance of 3 million. There was outperformance in pretty much every region. It was pretty broad-based. W e had a success with our holiday campaign, which we do every December. Wrapped was a huge success as well driving traffic to Spotify. Overall, the overall subs outperformance was pretty broad-based. Our next question is going to come from Michael Morris on music economics. Universal CEO recently called for a change to the streaming music business model, citing an increase in lower quality content diverting economics away from artists. Do you believe this is happening on your platform? What do you see as the path forward with your music label partners on this topic? First off, we have great relationships with all of our music partners and are in constant dialogues with them about their performance and our performance in all the markets around the world. I think the most important thing to perhaps note is that much like other forms of media, one of the most interesting changes that's been happening is obviously that people's music taste is becoming more personalized. As people's music taste is becoming more personalized, you're seeing 2 things happening. The number of artists that are mattering for users are increasing materially. The other change is that unlike in the early eras of streaming, we're seeing a notable increase in local repertoire. For instance, if you look at many of the local geographies now, you're seeing a lot of take France as an example. You're seeing a lot of French music actually being very impactful. In Poland, you're seeing a lot of Polish music being very impactful as well. I think there is a lot more artists that are mattering now than perhaps ever before. Obviously, the big counter to that would be doesn't mean that you can sustain yourself, or is it more one-hit wonders? I think you're seeing a little bit of both happening in the music industry at present moment. I think some of these trends are very powerful and very good, I think for consumers with more choice and more artists making their way. Then, you need to balance that, obviously, with having the ability to have sustainable artist careers on the back of that too. That's a constant dialogue that we're having with our label partners. I would mostly say that most of what we're seeing is quite encouraging because of all the response that we're seeing from artists around the world and their ability to grow their audience. Next question is gonna come from Doug Anmuth on gross margin. As you move beyond the 2022 investment year, do you still expect gross margin to expand in 2023? Can you talk about the key drivers? The short answer is yes. We think Q1 will be the low point in terms of gross margin for the year, with gross margin improving throughout 2023. That's still the plan. W hen we look at Q1 in particular, our core margin when we look at music and podcasting, is improving. Some of the investments we made in the back half of the year are still slightly impacting Q1. We think those will continue to moderate throughout the year, which will partly help gross margin. We've talked about the improvements in podcast gross margin as well, we expect that to get better throughout the year. We do expect that Q1 will be the low point for gross margin, and we do expect for it to improve throughout the year with hopefully a nice trajectory heading out of 2023. Next question comes from Mario Lu on operating income. You mentioned in the deck, an expectation for meaningful improvement in operating income in fiscal 23 and beyond. That being said, is there a rough timeline with regards to when we should expect overall operating income to reach breakeven? We haven't given a timeline on that. I would say, first thing is I think you can expect to see a meaningful improvement in the operating loss in 2023 relative to 2022. We expect that to be pretty significant. Again, as Daniel mentioned, we invested a lot in 2022, we'll get some of the leverage on top of that investment in 2023, along with higher revenue growth and more gross profit dollars. We expect that to improve and improve throughout the year. Exactly when we break even, we haven't said yet, but we feel like we're on a good path, and we feel like we are in a good position right now to have that speed and efficiency that we wanna have in 2023. A nother question from Matt Thornton on margins. Do you still expect 2022 to have been the peak drag from podcasts? Podcasts, do you still expect podcasts to reach breakeven within several years? Three, do you still expect the consolidated gross margin to reach 30% within five years? Um, so short- Why don't I begin, Paul, and then you can chime in because. Sure I think some added context here might be pretty good as well. I think the big thing that I just wanna highlight again is we mentioned, as Paul said before, that 2022 would be an investment year. We broke out the various verticals, where you would see that music been making steady improvements, but obviously, our podcasting business had been a drag to our gross margin profile. We also announced that 2023 would be a year where you'd see the reversal of some of those trends. I just wanted to add that context that that's still very much on the top line, for us, that you should expect music to be meaningfully improving, with things like Marketplace playing an important role. Then, podcasting, both as it grows in size with advertising revenue, but also, more efficient spending, will mean that you'll see improvements there as well. Then, Paul, maybe you can chime in on the detailed questions. Yeah. I can be quick now. The answer is yes to 2022 being the peak drag from podcasts. Yes to podcasts reaching breakeven within several years. Yes, we still believe our consolidated gross margins can reach 30% in five years. Okay. Our next question is gonna come from Justin Patterson. This is for Daniel. As Alex takes on responsibility as chief business officer, how should we think about his priorities and leadership for content and advertising, how those might differ from Dawn's? I don't think from a strategy point of view that it will differ all that much from Dawn's. However, again, the primary reason why we did this reorg was to drive speed and drive more efficiency. Speed will come in having more decision-making and faster decision-making. Essentially, Spotify is a lot more complex of a business than it was several years ago. To have both Gustav and Alex help me in the day-to-day in this much more complex business, I think will materially mean that we'll have more brains thinking about these things, we'll be having more decision-making so that we can make decisions faster, 'cause that honestly is one of the biggest blocker at this point. It's not that we can't execute on the ground, it is actually making real material decision-making at the top that's been one of our things that we need to speed up when we look at the internal feedback. Then, we're going to holistically now look at the business rather than looking at things bit by bit. Marketing was under Alex preview previously, but not advertising and not content. Now we're holistically looking at it as one P&L and focused on driving efficiency across the board by readdressing resources to where it's most needed. That would be a big improvement from prior org setups. All right. next question from Doug Anmuth on users and subscriber growth in 2023. How would you think about 2023 net adds for MAUs and Premium subscribers relative to your performance in 2022? What are some of the puts and takes here? Obviously we don't give 2023 guidance anymore. I think what we said in my outset is we expect really strong growth. O bviously on the MAU side, 2022 was a real outlier in terms of how much we outperformed. We see this often where we have some years where we over-index on MAU or we over-index on subs, and it can change even throughout the year in terms of how we're trending. I would say in general, anytime we're growing MAUs the way we are, it's always a really good sign of the business, the health of the business and the health of the future subscriber growth for Spotify as well. We're not giving guidance, but I would say we feel really good about the momentum as we exit 2022. We feel good about the guidance for Q1, how we're trending. My only addition to that would be again, to note that much of the investments we've been making over these past few years that culminated in 2022 was making platform improvements. Improving the number of content we had on our platform, improving the tools for creators and consumers alike, and that has led to better acquisition, better retention of the consumers really across the board. I feel really good about that. As I mentioned in my opening remarks, some of these things we expected to take longer on seeing the benefits, but we're seeing them already in 2022, and I think that's real positive news for the years to come. Okay, our next question is gonna come from Michael Morris on advertising. How has advertising revenue been trending in the first quarter of 2023? Do you expect the relative performance of podcasting and music growth to persist in 2023? How far forward do you have insight into demand trends? If you take a step back and you look at j ust advertising in Q4 overall, it's definitely continued to be very up and down. In Q4, we outperformed our expectations. Admittedly, those were lowered expectations, so we had lowered expectations coming into Q4. We actually outperformed those by about $50 million or so ±. And even within that, we had two months that outperformed and one month that underperformed. Even within Q4, it was pretty up and down. I think Q1, we expect more of the same. W e feel really good about the ad stack we're building. We feel really good about some of the acquisitions we've made, obviously at the high level Megaphone, but Chartable and Podsights and our ability to improve measurement and attribution across all of advertising. We feel good about that and where the tech is going, and then it's really gonna somewhat depend on just how the macro rolls out over time. It's been uncertain. I think we've done pretty well. Like I said, we excuse me, slightly outperformed in Q4, and we'll see how the year unfolds. Okay, next question from Benjamin Black on Marketplace. You had expectations for approximately EUR 200 million in Marketplace revenue for 2022. How did you track versus expectations, and how should we be thinking about the trajectory of Marketplace in 2023? We outperformed that $200 million. I think we had said at the Investor Day that we expected Marketplace to grow at least 30% in 2022. It exceeded those expectations pretty nicely, so we had really strong Marketplace growth overall in 2022. Again, we feel that product has a lot of momentum behind it as well and expect good things in 2023 as well. Okay, next. Another question from Michael Morris. Can you share detail on the investments that have impacted Premium gross margin? What types of products are being invested in? When do you expect them to be released, and what is the projected path to contribution? There's a number of things that go on there. A lot of it is things that we test and learn. We don't always talk about them. Some of the things that come out 6, 9, 12 months later. When we talk about an investment year, some of that is part of what was going on. It's things that we think are going to drive improved engagement, improved users, improves subscribers. And some of it, we have to absorb the cost as we're testing. We don't go through all of them. We do sometimes 10, sometimes hundreds of those within quarters. Again, I think we believe we'll get the benefits of some of those moving forward into 2023. You'll see the incremental investments slow and the benefits hit in 23. Okay, next question from Rich Greenfield on audiobooks. Is audiobooks as a category working? Was it a mistake? How has it impacted your thinking about new categories, some of those new categories you teased at the Investor Day? Yeah. I t's early days on audiobooks. That's what I can say. We're seeing some encouraging signs. We're definitely seeing people take up the offering. We're nowhere done from where we want to be and where we believe the category can be doing. I would just rather than perhaps giving any specifics here or preannounce things, I think that the most important thing I can do is give context in that there's two types of companies. There's the company that waits until it gets things perfect the first time, and then it tries to launch something that's perfect. There's the company that releases something that it knows needs work and then rapidly improves from there. We're definitely the latter. It's hard for people to understand when they're looking at us because it looks like it's an inferior product or an inferior strategy. We had the same notion around podcasting. How is this thing going to win podcasting these many years ago when we announced that. Yet now, four years later, we're the leader in that space. I think as you're looking at our strategy now you shouldn't draw any too big conclusions that we are that's our full intent of what we want to do in the category. We're, we're encouraged because we think fundamentally that audiobooks has a massive opportunity and that there are very few consumers that are currently participating in the ecosystem. If you look compared to our other verticals, music and podcasting, we thought pretty much the same thing. Nothing has really changed when we look at the space and what the potential is. Now we're just heads down focused on executing. During 2023, you'll see a lot of new things roll out in the audiobook category from Spotify. Our next question is going to come from Deepak on User Choice Billing. Were there any noticeable benefits to subscribers from the rollout of Google User Choice Billing in the fourth quarter, and are you seeing any conversion uplift? Yeah, it's still early days, it's tough to really know. I would say in general, I think we're just overall very excited about the opportunity. The join flow is better, giving users the choice on payment methods and how they want to work with us and purchase from us. We're excited about User Choice Billing. We think it's going to reduce friction and improve conversion over time. Still early days in terms of how it's impacted at this point. It is positive, though. It's early days, but positive. W e've got another question from Rich Greenfield on podcasting. Investors remain skeptical that podcasting is a good business and that it has meaningfully moved the needle for Spotify. Can you help them understand why you believe in the investment to date, especially in the context of your recent management changes? Yeah. I think the most important thing here is to go back on context. 4 years ago, we entered into podcasting. The major player in podcasting had been doing it for 20 years and was considered the unassailable leader. We wanted to tackle this heads-on, and we realized, again, as I mentioned in my comments around audiobooks, that this was a nascent space that was growing all but still was underconsumed to what we believe the potential was in the industry. We took the medium and pretty much have grown overall globally now the audience by a huge margin to what was true 4 years ago. It wasn't just that we took audience from another platform, but we actually grew the pie meaningfully for podcasters. As a result now we have over 5 million creators on Spotify, so a massive increase in the number of people who are creating podcasts, you being one of them. T his is true across the world really at this point. Net-net, I think we went from being almost nowhere 4 years ago to now being the leader in many markets around the world in this space. That adds several benefits to Spotify. It adds the benefit that it makes our business more defensible because now it is meaningfully contributing to our advertising story. It is also so that from a competitive lens. When we've added this content, what we're seeing is that consumers are not just consuming music on the platform, but they're consuming music and podcasts to a great extent. The number of users on our platform that are consuming podcasts keeps growing as well. As that's happening, their retention increases, and as that happening, it is impacting our business. What you're probably asking underneath all of that is that it's been a drag on the gross margin side. What does that mean for the future? We 've been making many investments. Some of them have been working greatly, and you should expect us to double down on those. Some of them, not surprisingly, haven't worked out. T here are certain shows that work really, really well for us, and there are shows that didn't perform as we expected. I think that's a sign of maturity that you go for the growth first and then you seek the efficiency. Generally, what you should expect us is across the board now to be focused more on that efficiency and creating more leverage, and that's certainly true in podcasting too. The management changes really had nothing to do with a change of strategy in podcasting. It is more around increasing the speed of decision-making and increasing the focus on efficiency across the board, because the next era of Spotify is one where we're adding speed plus efficiency, not just focused on speed or growth at all costs. That is a big shift, but it is also what we said during the Investor Day in June. Now we're gonna have to live up to that, and I know some investors don't believe that we're serious about it, but hopefully my remarks today shows that we are really, really focused on driving efficiency going forward. Another question from Benjamin Black on pricing: Last quarter, you alluded to a potential win-win with respect to the conversations you're having with the labels around price increases. What are some of the concessions you're looking for from the labels? Yeah. I can't comment on individual negotiations with our rights partners. As I mentioned before, we're thinking obviously how we can grow our business the best possible way. Sometimes that is keeping the price low and grow the number of users on the platform. Sometimes it is increasing the revenue per user, sometimes it is increasing our margin per user, and sometimes it's all of the above. The important part is, and what's pretty amazing with our Spotify story, is that this is something that creates win-wins with our label partners too. If Spotify does well on a market, it generally increases the revenues for the labels as well. We've seen that time and time again that this close partnership generates material benefits for both companies over time. That's what we will expect going forward too as we're driving more benefits for all of our creator partners and Spotify. We've got another question from Doug Anmuth, on marketing: How are you thinking about sales and marketing spend for 2023 following the ramp in spend over the past 2 years? Yeah, we definitely increased marketing a lot, or significantly in 2022. It was definitely a driver of the outperformance in MAU and it was very intentional. We had a plan and a focus at the beginning of the year to really invest, particularly in some of our newer markets, to grow there and make sure that we had the foothold that we wanted to have. By all accounts, it was extremely successful, if not more successful than we even thought. I do think you'll see 2023 being, we'll be more efficient with our marketing spend into 2023. A s Daniel said, we're gonna be more efficient. We're gonna be more thoughtful about all of our spending into 2023. No specific guidance, but yes, there was a big ramp in 2022, and I think you'll see us be more efficient with our marketing spend, into 2023. Okay. Another question from Ben Black on ticketing: Could you give us an update on your ticketing business? Is this an area of focus, and how should we be thinking about the business model and the market opportunity? Yeah. Just to level set on context, long term, I think it's absolutely a business model and market opportunity for Spotify too. Our strategy is to be an open platform, and we wanna enable as much as possible, and we are very partner friendly when we're doing so. Think about, for instance, how we're working with our label partners, think about how we're working with merchandise and other things too. It is not offering our own solution and locking people in. It is opening up the platform so that creators have as much choice as possible in choosing whatever options they want to do. The primary strategy is very simple. We see a double-sided win-win here, which long term will translate into business opportunity. Our creators trying to grow their audience on Spotify. They're trying to engage more with that audience, and we're obviously trying to help them monetize that audience even better. A huge part of that, especially for the music audience, is obviously touring. If we can be a partner to creators and help them sell more of their tickets, that is a meaningful increase to many artists' livelihood, which is great and something we're focused on. The separate part is on the user side. The same is true as well. One of the big things we're seeing is users are asking us, "Help me find more great things to go watch." We saw a tremendous uptake in the number of people who are visiting the Concerts tab on Spotify in 2022. The strategy isn't to go compete with the ecosystem, but rather to enable the ecosystem and then from there on, there will be opportunities for us to play as well. You, you can see that already today where there's lots of concerts from all the big vendors being available, and we'll add more and more of inventory. Over time, that will translate into business opportunities for Spotify as well. Okay, next question from Mario Lu on cost savings. Can you help quantify the annual savings from the headcount reduction you announced last week and any specific areas of the business to call out that were impacted more so than others? We're not gonna quantify the savings. O bviously you can do the math. It's roughly 600 employees that were affected. The 6% was actual employees. W e've also are looking closely at open headcount to see which of those we wanna backfill and which of those we will also eliminate as we've mentioned a number of times, as we try and be more efficient with deploying capital and employees moving forward. There wasn't really any specific area. It was pretty broad-based across most of the divisions within Spotify. Okay, we've got another question from Rich Greenfield on the product. Spotify recently began testing a Friends tab on the bottom strip of the app. Can you help us understand your thinking here? W e do a lot of experiments on the product side, in many different areas. What you probably have seen is one of those experiments. Since we're not committed to rolling that out, I don't really have much of a comment, but to say that overall, we're committed to creating the best audio experience for consumers and creators in the world. Obviously, social could be a meaningful driver of creating an even stickier and more engaging experience. Okay. We've got a follow-up question from Doug Anmuth on subscribers. You typically see MAU to Premium subscriber conversion in the 12-18 months range. Do you expect any change to that conversion or to churn, given the large MAU cohorts over the past couple of years? I'd say, look, at a high level, we've said this repeatedly for a while. Anytime you're seeing accelerating growth in MAU, that always tends to be very good for our business and lead to subscribers over time. A t this point, we don't see any reason why any of our historical trends would change. It's always tough to know. Again, given the outperformance in MAU this year, that's always a good harbinger for sub growth in the future. With respect to churn, we don't obviously give those numbers out. Year-over-year churn, though, was pretty consistent with where it was at this point last year. Even with the strong growth, we're not seeing any uptick in churn at all. The one addition I would probably just make is that it's generally been true over the entire existence at Spotify that the longer a person stays with us, the higher the likelihood is that they'll end up being a Premium subscriber over time. A gain, country mix changes, maturity of those market changes, and so on. When you look at a cohort behavior, it may take longer in some developing markets than it does in mature markets, et cetera. The trend is the same, which is the longer they stay, the more likely they are to convert. Of course, the better the engaging experience we make, the more likely they are to stay, and therefore, the more likely it is to lead to positive business results for us long term. All right. We've got time for one to two more questions. We're gonna go to the next one from Benjamin Black on margins. I think you classified 2022 as an investment year. Could you break down which investments are falling off that will drive the positive gross margin inflection in 2023 and 2024? Yeah, I think Look, there's a number of factors that improve gross margin. I think we've talked about a lot of them. We're gonna continue to see Marketplace growth, which will help our music gross margin. A lot of the investments that we did in 2022 that were investments with no real benefit to the revenue will start to hopefully bear fruit in 2023 and beyond. We've talked about podcasting, that 2022 was gonna be the peak year in terms of the drag that podcasting had on our gross margins, so we expect that to get better in 2023 as well. Pretty consistent with what we've said in the past in terms of what the impacts were in 2022 and how that will change in 2023 and beyond. All right. We're gonna take the last question from Rich Greenfield on competition. Does Spotify need to figure out music discovery, knowing that TikTok appears to be ramping up to launch a music subscription service in the U.S. and Europe later this year? W e have what I think is a pretty decent music discovery already, which works pretty well. That said, of course, we're always looking at how we can make that better. You're right to point out that TikTok obviously is a formidable competitor, I think, to any platform in the world today, no matter what field you're operating in. We feel pretty good about the improvements we made in the platform already and obviously, I look forward to sharing more on Stream On, wink, around all the updates that we're planning throughout the year as well that I think will mean a lot for both music and podcasting, and beyond. We're focused on having the best possible platform we can have for both consumers and creators and that remains true. I feel candidly that we're in a better position competitively than we've been in many, many years. Throughout the existence of Spotify, we've always heard of competitors, and it was always this big, scary wolf, whether it was Apple or Amazon in the past, et cetera. Now it's perhaps YouTube and TikTok, et cetera. With both, all the improvements we've been making in music, but also with the addition of podcasting and audiobooks, it is a much more resilient consumer experience. I feel really, really good about our competitive differentiation, and I think when you look at already our 2022 results on both the MAU side, the improvements in the Gen Z, our audience in Southeast Asia, those are showing that our products and platform is very favorable in the competitive marketplace. All right. Thanks, Rich. That's gonna conclude our Q&A session for today's call, and I'm gonna turn it now, back over to Daniel for some closing remarks. All right. T hank you everyone for joining the call. I'll just once again wanna reiterate my confidence in the business now as we're entering the next phase. While it was really great to close out 2022 on such a high note, the fourth quarter's I think just really one of many proof points that shows that the investments we made over the last few years are really paying dividends. When I look at the totality of what we've done one thing this is, stands out to me, and it is that it's not always linear. We try to draw these linear dots, but that's not how the world works. What we've been going through has really been a multi-year approach that really culminated with what we presented to you, the community, at our Investor Day in June. That's the plan we're tracking consistently against. I look forward to sharing more about our evolution and all the things that we're building at our upcoming Stream On event on March eighth. In the meantime, please check out our podcast, For the Record, for more details about the quarter. Thank you everyone for joining us. Okay, that concludes today's call. This concludes. A replay will be available on our website and also on the Spotify app under Spotify Earnings Call Replays. Thanks everyone for joining. This concludes today's conference call. Thank you for your participation. You may now disconnect.