Spotify Technology SA: i-Day Takes: Talking Bout the"Generation" Era

Research evidence excerpt

Spotify Technology SA: i-Day Takes: Talking Bout the"Generation" Era

IdeaMExhibit 1: Spotify's 2030 guidance relative to our estimates

-

2026E 2030E

Estimated MSe Guidance*

MAU (mm) 829.5 1,022.2 1bn

Revenue CAGR* 14.5% 12.3% 14-16%

Gross Margin 33.2% 37.2% 35-40%

EBIT Margin -3.4% 21.8% 20%+

Source: Company data, Morgan Stanley Research; Note: 2026E revenue indication represents YoY growth.

We continue to see meaningful opportunity to drive value (and price) through

increased product interactivity: Taste, trust, and culture build upon scale, data, and

the user experience as the platform evolves from access to personalization and now

generation. Spotify is clearly sliding along the interactivity scale

(audio=>video=>mixing/creating=>IRL/concerts) which inherently enhances quality

of engagement and monetization potential ( Exhibit 2 ).

Exhibit 2: Increasingly Interactive: Interactivity positively correlates with price.

For example, one hour of music streaming monetizes at ~$0.10 vs ~$50 per hour

for live concerts, with video and gaming in between. Spotify continues to move

from passive, individual listening to more interactive, dynamic, and increasingly

social experiences.

Music Video Gaming Concerts

(Global)

~10¢ / hour ~25¢ / hour ~$1 / hour ~$50 / hour

Less Interactive More Interactive

Source: Company data, Morgan Stanley Research

The power law opportunity in Spotify's Large Taste Model (LTM): With >760mm

MAUs & nearly 300mm Premium subs in 184 markets, Spotify already has double

the size of any other music service. Perhaps more interestingly, almost two-thirds of

all Premium streams happen on Spotify and >100mm people spend >28 days a

month on the platform. This creates a unique data advantage that also allows more

segmenting and monetization potential.