Good afternoon, and thank you for standing by. At this time, I would like to welcome everyone to Spotify's Fourth Quarter 2021 Earnings Call and Webcast. I would now like to turn the call over to Bryan Goldberg, Head of Investor Relations. You may begin your conference.

Great. Thanks, and welcome to Spotify's Fourth Quarter 2021 Earnings Conference Call and apologize for the slight delay, we were having a technical issue. Joining us today will be Daniel Ek, our CEO; and Paul Vogel, our CFO. We will 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 #SpotifyEarnings4Q -- excuse me, #SpotifyEarningsQ421. Analysts can ask questions directly into Slido, and all participants can then vote on the questions they find the most relevant. [Operator Instructions]. 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 materially differ because of factors discussed on today's call, in our letter to shareholders 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 letter to shareholders in the Financials section of our Investor Relations website and also furnished today on Form 6-K. And with that, I'll turn it over to Daniel.

All right. Hi, everyone and thanks for joining us. Obviously, it's been a few notable days here at Spotify. When we entered into the podcast space in 2019 with the intent to help modernize and grow this space for all type of creators, we assumed it would challenge and test our teams in new ways. And there's no doubt that the last several weeks have presented a number of learning opportunities. And I hope that you had a chance to read our response that address many of the questions we've received from creators and partners and employees and the medical and scientific communities. There's still work to be done, but I'm pleased that Spotify is already implementing several first of its kind measures to help combat misinformation and provide greater transparency. We believe we have a critical role to play in supporting creator expression while balancing it with the safety of our users. And we will continue to partner with experts and invest heavily in our platform functionality teams and product capabilities to meet this evolving need head on. Moving on to our results. 2021 was an eventful for Spotify and the world in general. Throughout the pandemic, business have seen an enormous disruption in consumer behavior, causing demand curves to shift. And Spotify, of course, has been no exception to this. In our case, these shifts mostly play to our advantage in 2020. But we did see some headwinds in the first half of 2021. And by the end of Q2, we saw reversal back to positive momentum. And this trend continued throughout Q3 and Q4. Historically, Q4 has been our biggest quarter and 2021 was no exception. In fact, Q4 was our largest quarter of MAU growth in Spotify's history. It's a significant MEU driver and -- a…

Thanks, Daniel, and thanks, everyone, for joining us. While Daniel touched on most of our key KPIs, I wanted to add a bit of color on our gross margin, which finished at 26.5% in Q4, above the top end of our guidance range. Relative to our forecast, our gross margin was helped by a shift in investment costs that were originally targeted for Q4. That benefit was partially offset by an unforeseen expense related to our ads business. Taken together, our gross margin still would have finished above the top end of the range. Some of the investment costs in Q4 that didn't materialize are now reflected in our Q1 gross margin guidance. Looking at our full year 2021 margin of 26.8%, we made meaningful progress relative to the 25.6% we reported in 2020. Full year 2021 did benefit from close to 50 basis points of favorable royalty adjustments. However, even excluding them, gross margin was still an improvement year-on-year. Looking into 2022, we expect a continuation of the favorable gross margin trend you saw in 2021 for our underlying business as we grow advertising and drive further growth in Marketplace contribution. We also expect improvement in our core podcast margins, both on the O&E front as well as on Megaphone. Given the encouraging traction we're seeing, we do plan to invest in incremental content and music initiatives in 2022 with an eye towards our long-term goals of 1 billion users, 20% plus revenue CAGR and a 30% to 40% gross margins. While these investments may slightly alter the progress we've seen in consolidated gross margin over the past 2 years, it is exactly this progress that has given us the conviction to increase our investments in certain areas and gives us confidence that we are on the right path…

Thanks, Paul. [Operator Instructions]. Our first question today is going to come from Rich Greenfield on Joe Rogan. And the question is, you've clearly changed your public stance given artist pushback to his content. Is it a slippery slope in censoring content on the platform and have any advertisers left Spotify in protest?

Right. I'll take this one. So I know this issue has been top of mind this week, but I think it's important to take a step back. We're trying to balance creative expression with the safety of our users. And of course, this is a very complicated issue, as I noted in my opening. But I'm really proud of the steps we took following the concerns raised by the medical and scientific communities. It's worth noting that both the content advisories, the COVID-19 content on our platform with content from physicians and health experts, which I talked about in my post as well, as well as push policies for creators that have already begun to roll out. So I think the important part here is that we don't change our policies based on one creator nor do we change it based on any media cycle or called form anyone else. Our policies have been carefully written with the input from numbers of internal and external experts in this space. And I do believe they are right for our platform. And while Joe has a massive audience, he's actually the #1 podcast in more than 90 markets. He also has to abide by those policies. So I think when you think about that and you think about the ads business, I have a tremendous amount of confidence in that. And of course, we're hearing from our partners. But Spotify has a broad range of content on our platform, so there really is something for everyone here and for advertisers to take too as well.

All right. We're going to go to our next question from Richard Kramer. Nearly 4 years after your direct listing and facing the renegotiation of publishing rights post 2022, do you see material opportunities to raise gross margins in the music business given the role of labels and publishers?

Well, I kind of alluded to this in my opening remarks, but I think the -- perhaps #1 misconception I see people making is that they think everything is an outcome based on negotiations with the industry and these renewals that we constantly are doing. And this is true, by the way. We do renew our label and publishing licenses pretty much every year. There's always one big upcoming renewal that we're constantly working on. But everyone thinks that it's really a function of that and that alone. But more and more, if we're building this creative platform, it will not be a function of just those licenses. But more and more, it will be based on these tools and services that we're building for creators on top. A good example that we talked about before has been the Marketplace efforts that we've been building on and that we've shared in prior quarters and also this quarter, the success that that's having. And all of those things are things even though we don't break them out that you can see is impacting the gross margins positively and have been over the year. And I think it's important to say that because if you take a step back, going into 2021, our expectation for gross margin, we have far surpassed and done much better. And those tools and services that were built is part of that story.

All right. Next question from Mario Lu on subscriber net add trends. Average 27 million net sub adds annually for the past few years, is that still a benchmark to use for 2022? And are there any puts and takes that would cause the divergence from historical?

Yes. Thanks, Mario. So first, I'll just kind of reiterate what I said in my opening comments is that although we're not giving full year guidance anymore, if you look at the net additions we achieved for both users and subs in 2021, we don't see any material change in that trajectory into 2022. So that's sort of how we're thinking about at a high level the 2022 numbers. And then just when you look at Q1 in particular, there's different seasonal trends and patterns in each year. What we've seen over the last couple of years is Q1 has become increasingly less important to us for yearly growth. Last year, in particular, we changed the cadence of some of our promotional activity. We actually had 3 campaigns for subscribers at varying shorter lengths, but more frequently which changed the seasonality throughout last year, more heavily weighted into Q2, 3 and 4. And we're likely to see similar types of seasonality again in 2022.

All Right. Another question from Rich Greenfield on the advertising opportunity. Talk about advertising becoming 20% of revenues, if not 30% to 40% longer term. While you're no longer giving full year guidance, how do you think about the trajectory of getting to 20%? And what are the key puts and takes?

Thanks, Rich. So I think, obviously, it's hard to predict long term exactly how it will play out. And I think when you look at platforms overall in this space, and the mix between different options, I think I've alluded to this in the past. I don't think many of these content platforms in the future are going to be single revenue stream. I think there are going to be multiple revenue streams, and it's really just about the mix. We started from the paid and we're obviously growing into having both advertising and paid. And there will be some other platform that started with advertising and then start adding more paid content as well. So I really think it's a combination of subscription, a la carte and advertising that long term will be the revenue mix. Now speaking specifically to advertising, what is the primary puts and takes? It really, at this present moment, comes down to 2 things primarily. One is inventory. We see an enormous amount of demand from advertisers. And the #1 thing that we're stretched for at the moment is more inventory. And that's why you see us introducing things such as SPAN and other things. And then long term, with a little bit more horizon, it's obviously international. So many platforms start out monetizing the U.S. and U.K. very well, but it takes a little bit more time to monetize the international markets. I don't think we will be an exception to that. So long term, I think it will be more geographical things, too. But there's really positive signals in those markets, too. I remember going back to the Chinese market 10, 15 years ago, there was a huge debate whether advertising was a viable model at all in the Chinese in that market. And now you see gigantic companies being built with advertising as the #1 source. And I think that bodes really well for regions such as India, Indonesia and others, too, where Spotify has obviously had enormous success. But that's also how you should read into those investments. They may not be large from a revenue perspective today, but I'm absolutely confident that by investing in these markets and becoming the #1 audio platform there, that's going to be a very worthwhile position to own in the long term.

Yes. And I would just add a couple of points. I think, one, if you just look at this year, for the full year, we finished at 12% of revenue, 15% in Q4, and that was up from 9% of revenue last year. So we saw a nice growth there. Clearly, we saw a lot of strength in the advertising business coming out of 2021, which we continue to see in the start of 2022. I would also kind of echo what Daniel said about international. I think we talked about this last quarter about an investment push we're making to actually expand our advertising presence outside the U.S. We've had a blueprint in the U.S. that has worked really well for us, and you've seen that in the growth we have, both on the music side and the podcasting side. So we expect that, that investment we're making throughout 2022 will drive significant improvements on the advertising monetization outside North America.

Next question is going to come from Batya Levi on premium ARPU. How should we think about premium ARPU trends in 2022? Can your recent price increases offset the pressure from growth in lower ARPU regions?

Yes. So I guess just taking a step back, we saw a nice growth in ARPU throughout the year and finished Q4 up 3% and up 1% on a constant currency basis. So we feel good about the trajectory in ARPU. Some of those price increases will continue in the first half of the year, which will help. And I'd say, in general, we expect ARPU to be kind of flat to up a little bit in 2022.

A question from Matthew Thornton on advertising. You've talked about being supply-constrained in this part of your business. Can you update us on the supply-demand conditions you're seeing and the key drivers of supply in 2022?

Yes. So I'd say a couple of things here on the demand-supply side. First of all, we've grown podcasting in general. Well, music overall in podcasting as well as a percent. We're seeing engagement increasing across the platform, particularly in podcasting. We're seeing consumption increasing. So all of that is leading to more inventory, which is great. We're seeing more publishers in SPAN, up double digits quarter-over-quarter. So that's allowing us to see more inventory. And then what we've also seen is that with SPAN, we're able to monetize really well. And because we're monetizing giving people good returns, they're opting more inventory into the platform for us to sell. And then when we have more inventory to sell on the platform, you get even more advertisers who want to spend and be a part of that. So we're seeing this nice flywheel effect where the performance of SPAN is going really well. People are then adding in more inventory into the ecosystem and then more advertisers want to be part of an even bigger platform. So that's worked really well. Obviously, opening SPAN up into Anchor will be really strong as well, the potential to be strong for next year as well as a number of other initiatives.

Yes. And the only thing I'd add is, I think it's really the combination here. It's really both about expanding audience but also expanding the number of creators, too. The more creators we have, the more inventory we have to place against it. And then obviously, the more users will come as a function of the more creators we have as well. So that's another sort of key component of this. And you've alluded to some of that in your question with audiobooks, et cetera.

All right. We've got another question for Matt. Do we have any update on the hi-fi tier? What's been the delay? And does your guidance contemplate any price increases in 2022?

All right. So I'll start with the question and then Paul can speak to the guidance. So yes, I mean, many of the features that we talk about and especially that's related to music ends up into licensing. So I can't really announce any specific on this other than to say that we're in constant dialogue with our partners to bring this to market.

Yes. And then with respect to price increases. We haven't commented on anything at this point in time. I go back to earlier in the year when we did make some price increases, we feel really good about the churn characteristics there, wasn't anything material as well as gross intake where there wasn't any material changes. So we feel good about the ones we've already put in place, but no comments or updates on any additional pricing increase moving forward.

The next question is going to come from Deepak. On premium subs, can you give us some color on your premium sub guidance of $183 million? Is there any impact from changes in promotions or incremental churn that's weighing on sub growth for the first quarter?

Yes. So I addressed this a little bit earlier, but let me just kind of give a little bit more color. It's really a lot about the promotional cadence and the seasonality throughout the year. So as I said, if you go back a couple of years, historically, we had always done promotional campaigns in Q2 and Q3, and there's always some seasonality between Q1 and Q3 relative to Q2 and Q4. Last year, we actually tested an additional campaign in Q3. And so instead of having 2 campaigns, we had 3 campaigns, and those campaigns were actually a little bit shorter in length in each period. And so that impacted the seasonality in 2021, and that will likely impact the seasonality in 2022. Additionally, when you look at Q4 in general, it just continues to become a bigger and bigger quarter for us. And so you saw both the success of the seasonal campaign in Q4, number one. And then the success of Wrapped also, which drives a lot of incremental traffic to Spotify. And so when you look at Q1 in general, it continues to become just a smaller part of our overall subs picture every year. Part of it is just the hangover or the follow-through from how strong Q4 tends to be. And it's also a part of how we've now adjusted our promotional cadence throughout the rest of the year. And with respect to churn, while we don't give out churn guidance, churn has continued to come down. It's down year-on-year. When you look at our core churn of our monthly subscribers, we feel really good about the trajectory of the churns.

Okay. Next question from Andrew Marok on gross margin. How much do content investments play into the first quarter gross margin guidance? Is there anything notable driving the year-on-year decline?

Yes. There's a few things in Q1. One is, as I mentioned, there was an initiative we were going to test in Q4. That test got pushed to Q1. So there's some incremental there. There's a few other things, the first year of lyrics which will have a little bit of an impact. And the rest is investments. As you've seen on the content side, we've had a lot of success, particularly in U.S. And so some of the content will continue to go to U.S. growth, but then as well as expanding a lot of our strategies and innovation into international markets and newer regions on the content spend. And then I'd say lastly is we are still operating under the current CRB rates and so that will be a an impact a little bit in the U.S. as well on the publishing side. And as I said, in general, we feel really good about gross margins and how it's progressed over the last 2 years. It was up in '20 and again in '21. And when you look at sort of the core fundamentals of gross margins and the things that we're doing year-on-year, we're seeing a lot of leverage, particularly on core O&E podcasting as well as benefits from Marketplace and advertising. And so gross margin in 2022, it's really that confidence in what we've already done, which is giving us -- or giving us that confidence to continue to invest in 2022.

All right. Next question from Justin Patterson on the 1 billion user opportunity. Daniel, last year at the StreamOn event, you previously spoke to a 1 billion user opportunity over the coming years. What are the key investments to get there as it implies a significant step-up from the current MAU base?

Yes. I alluded to some of this in my opening remarks, but we think a very, very key effort in that is going from the 11 million total creators that exist on Spotify today to 15 million active creators on Spotify in the coming years. That amount of content, you're going to see a lot more engagement with the tools that we're building, both for creators and consumers alike. You're going to see consumers and creators expand their engagement in totally new ways that will, we think, define what this next generation of audio will look like. But it's a little bit of a push. I would want to end by saying that you're going to hear us talk a lot more about this during our Investor Day. So I really hope to welcome all of you there to learn more about what our plans are for the coming years in that area.

Next question from Ben Swinburne. A couple of questions in here. Does the first quarter premium guide reflect elevated churn from the recent Joe Rogan controversy? And are there any additional steps you plan to take to contain potential fallout? And then separately, can you put the audiobooks opportunity in context for us?

Yes, so I'll -- for the first time, I think I'll actually answer a guidance question, but I'll start there. Yes. No. So the easy answer is we don't reflect any churn from the recent JRE thing. In general, what I would say is it's too early to know what the impact may be. And usually, when we've had controversies in the past, those are measured in months and not days. But I feel good about where we are in relation to that. And obviously, top line trends look very healthy still. So in terms of the steps that we've done, as I've outlined, we've taken pretty dramatic steps on Sunday in my blogpost. Three things. One is publishing our policies and making them clear to the world. Just an acknowledgment from my side. That's probably late, we should have done it earlier, and that's on me. But the second thing is very, very big and no other audio platform has done this, and that's providing this content advisory notice next to COVID-19 content. So all COVID-19 episodes will be tagged with this that then will link to a accompanied messaging by scientists, physicians and public organizations like the CDC and WHO, et cetera. You're going to notice this, and this is being rolled out right now as we're speaking. So this will be very prevalent, very visible at the very top of every episode that speaks about COVID-19. So I feel really good about what we're doing there. And it's really unprecedented compared to any other audio service what you'll see us do in the coming days. So the last thing then is, can you put the audiobooks opportunity in context for us? So I think that there's 2 modalities of audio somewhat simplified. We have the podcasting, which…

Great. Next question is going to come from Eric Sheridan. Coming off the content investments of the last few years, can you update us on management's longer-term thoughts around gross margin trajectory and the mix of headwinds or tailwinds in the coming years?

Yes. So to start, I'd say, at a high level, nothing has changed at all in terms of the long-term guidance we've already outlined in terms of where we think we go over the long term, that 30% to 40%, which we've already talked about. And as Daniel mentioned, hopefully, we'll have some time to unpack that more at the Investor Day in Q2. So that's number one. When you think about the headwinds and tailwinds, I think what I would say is we actually feel like we're getting nice leverage on a number of the initiatives we already have. So when you look at some of the content we've had on again, for more than a year, and you see revenue per listening hour increasing at a faster rate than cost per listening hour, we see that leverage starting to show up. And so the reason we're investing more is we're doing it incrementally in more regions and in more areas because we've seen the benefits of the leverage on the products that we've had for a period of time right now. I would say the headwinds, a lot of them are, I would say, self-inflicted, meaning we are investing against what we think is an even bigger opportunity. And so we could probably be more harvest mode right now and show near-term more incremental margin expansion. But given what we're seeing in sort of the core business, we feel like the investments are really going to pay off to drive even bigger long-term gross margins in the future. So that's how we think about it.

The one thing I would just add to that is when you look at it, when we signaled for 2020 and 2021 was actually that gross margins would go down with the levels of content investments that we were making. But if you look at what actually happened, we're really ahead of that plan. So a lot of these things are proving out in a very, very strong way in our business. And Paul alluded to some of those, it's Marketplace, it's obviously advertising and some of those other investments that we've been making in O&E content, too, which improves that gross margin. So we feel very emboldened by that, and that's honestly the light that you should look at our investments.

All right. Next question from Mike Morris on Marketplace. How was 2-sided Marketplace driven benefit for both you and your label partners during the current contract period? Has it been a win-win? And do you expect terms to expand going forward? And how can this impact your gross margin progression?

Yes. So I'll deal with this. So I think the first thing that I would say is it has very little to do with our current contract period, like I alluded to in my prior conversation. It's more in addition to whatever the contract dictates. So the way you should think about this is that we have a platform and we have a set of licensing agreements that dictate a lot of the content that we have on that platform. In addition to that, there's a lot of tools and services that we have on top of our platform that all creators and all consumers can choose to opt into. And so Marketplace efforts are those types of businesses on top of our existing licensed content business. And so what's interesting for me and how you should think about gross margin progression is obviously each dollar that's generated by those tools and services that we're offering. Generally speaking, if there's software, means that they're more like 80% or 90% gross margin dollars that come in. And as you're dealing with Spotify overall, which, of course, is a lower gross margin business, that quickly adds up.

The only thing I would add on the Marketplace side, just to give some context is, first of all, as Daniel talked about it, we really think about it as really marketing tools that are working. The way it obviously shows up in the P&L is just purely on the gross margin side, even though it's really more of a kind of a marketing type of event. That being said, I think we gave a number of 30 million contribution in 2019. 2020, I'm not sure we gave a number, but you can assume it close to double in terms of the benefit. And then we saw a material increase again in 2021 with respect to Marketplace's contribution to the product.

All right. Another question from Richard Kramer. This one's on engagement. If you're back to the same level of overall hours of listening but on a far larger base of subscribers, what does this say about engagement? Does that depend on reopening and commute times?

I'm not sure I fully understand the question, so I think it might be a little -- missing something here. But actually listening hours per user is actually up. So engagement is actually really strong. We've seen this year was increase in DAU to MAU. So we're seeing daily actives overall in the platform go up. Listening hours per user was up. So engagement is actually strong and healthy on the platform.

Okay. A question from Steven Cahall on the gross margin outlook. While we realize you're no longer giving annual guidance, do you expect 2022 to be a year of operating leverage at the gross and operating lines? Or should we think about it more as an investment year as it relates to margin expansion?

Yes. I would say I think there's some puts and takes in that and it's one of the reasons why I kind of gave the commentary I gave at the beginning. I do see, as Daniel mentioned, sort of the core gross margin has gone really well. It's probably actually ahead of schedule in terms of where we are and where we thought we would be. And so on the gross margin for this year, we're going to continue to invest. That being said, we've seen improvements in areas faster than we thought in the past couple of years. So there's some puts and takes in the gross margin. And on the operating side, I do think you're going to see an increased investment. We've talked about some of the things we're doing on the ad side to grow the ads business outside the U.S., which, again, we believe will really actually significantly jumpstart the revenue opportunity there as well as things we do on the content side. So lots of puts and takes, but I think we feel really good overall with kind of how we came out of 2021 and where we're heading.

Okay. Another question from Deepak, this one on label relations. Can you refresh us on the timeline for the next round of label negotiations? And what would some of your priorities be in this next round?

Yes. So what I would say is the timeline for next round of label negotiations is always. So we constantly have some deal that's being renegotiated or negotiated again and extended pretty much always. So I don't think 2022 will be an exception to that rule. In general, the key priorities that we're working towards is just enabling more flexibility on the platform. So that's where you should expect us to be focused on in these negotiations because we want -- we really believe that the more we can act as a true platform where these creators can engage directly with their audience, go from casual listeners to fans to superfans, that's going to unlock the next wave of growth in the music economy. If you really take a step back and kind of look at it, like much of the early days of Spotify was really about stopping piracy. As simple as that. And I think we did a really good job in that. And the next step of that was turning people towards paying for streaming. And now we're more than half of the entire music economy globally is streaming. And it's the most dominant way that the music industry currently exists. But I think the next evolution is we really replaced one model, right, which is you paid a la carte, which meant that typically the superfans were one paying for music and the vast majority of people weren't paying at all. Now we have an ecosystem where hundreds of millions of people are paying for music again across all of these subscription services, which I love because I go back 5 or 10 years ago, the fact that even one service or let alone every single service could have 100 million subscribers, which is not for most people to think about. And now you see lots of subscription services getting to 100 million. And obviously, Spotify is one of the largest with our base. And in music, we are the largest. So I think that just shows that scale has been redefined when it comes to the Internet. But what's true here is that so far, right now, we're kind of monetizing everyone with a one-size-fits-all model. Yes, we do have free and we have this paid subscription. But I think the evolution here will be about unlocking through superfans. That's where the real dollars comes in. And that was always the music business to begin with. And when we unlock that, I think we'll unlock the next wave of growth in the music economy. So for me, that is the #1 thing that I'm focused on unlocking, more flexibility, more ways for creators to use their assets, videos, engage with people, have their content show up in new unexpected ways. That will drive engagement and that, in turn, will drive people to move from casual listeners all the way up to a superfan and enables new forms of monetization, too.

All right. Another question from Ben Swinburne. Despite being your most penetrated and most competitive region, North America continues to be your fastest-growing premium base. Is that a sign that the international runway for premium growth remains long or is it that international willingness to pay is a headwind?

No, I think we -- first of all, I think we definitely think there's plenty of growth in both. I think what you've seen in a lot of areas is in your more established markets, you grow there really fast and then the monetization comes after. And then you grow into newer markets, and you get sort of through critical mass and then the monetization comes after that. And so what we've seen is healthy growth in users and subs across all of our regions. You've seen a lot of, in the last couple of quarters, MAU growth coming out of Rest of World and LatAm and some of our newer markets. And those will monetize over time. And so I think that's the dynamic we see at play here. So we feel good about the monetization we're seeing in North America as well as Europe. And we see the opportunity to continue to grow and expand in LatAm and rest of world, and the revenue will then follow after that.

One additional comment I'd just make is really the one about sort of emerging markets that I made about advertising. 10 years ago, people really did not think advertising would be a viable medium in many emerging markets. And obviously, we're now seeing that that's not the case. So looking at paid subscription, now a lot of people are saying, well, paid subscription can't be a viable means in many of these emerging markets. I think that will turn out to be untrue as well in the coming years. And that's certainly what we're investing behind. But that said, there are local nuances in how you market to these customers, how they pay for services, too. So we're doing a ton of innovation on that front. We're doing weekly payments, prepaid payments. We have took tooks driving around in markets collecting physical cash to pay for the subscription, too. It's really, really staggering. And really cool to see all the ways that Spotify is showing up locally around the world.

All right. We've got time for 1 or 2 more questions. We're going to take one from Mark Mahaney on Marketplace. Two-sided Marketplace came in stronger than you had estimated in 2021. How do you think about growth for 2-sided Marketplace going forward? And are there any proxies or bogeys that suggest how big this part of your business could get?

Well, maybe I'll start and then see if Paul wants to chime in. So yes, I mean I'm very pleased with the results of a 2-sided Marketplace. And while it's certainly in the early innings, I think, both in the tools that we have available now, but just imagine it's more as an umbrella for all of the tools that have been sort of alluding to earlier this day too about superfan monetization, about various ways where in audiobooks, you can imagine advertising or a la carte payments, et cetera. It's really about allowing more flexibility for creators and consumers alike. So long term, I think when you look at the umbrella of Marketplace, there will be a lot more for us to do and to launch. And I think the potential is just gigantic. It's really about unlocking the creative economy. Obviously, in the near term, there's lots of puts and calls on how we grow the number of creators that are engaging in the existing products that we have. And obviously, our ability to ship new products that resonate with creators and consumers alike. So those are kind of the puts and calls, and I think Paul talked about this earlier, too. The hardest thing for us oftentimes to -- is to gauge exactly when something will launch because we're always running hundreds, if not thousands, of different experiments across the platform. So I don't know which exact of these things will resonate by what time. But what I can say is that the fact that creators and consumers want to interact in new ways and that there will be lots of ways to monetize those relationships, that I don't think should be questioned. That's really a massive mega trend on the Internet.

And I would just add, I think I mentioned earlier, but we feel really good about how it's progressing on our gross margins. So I won't go through the numbers again, but gross profit dollars and it really is marketing and tools and services that are resonating, and we've seen it in the benefit of the P&L.

Okay. Great. We've got a question here from Hamilton Faber. Can you update us on the performance of the new markets that you launched in 2021, and how they performed relative to expectations?

Maybe I can start and then Paul can chime in. We probably won't break out a lot of markets, but I'll make an exception here. Now it's never what you imagine when you launch them. So an example, one of the highlights we have over one of the most successful markets is Venezuela. And I don't think that we had that one on our bingo cards as being one of the more successful breakout markets of the early ones. But honestly, when you look back, when we've made these batch launches before, which we've made a number of different times, we had a very similar one in LatAm. It follows very much the same trajectory. So you launched these markets, it's very hard to predict where it will be easy, where it will take a little bit longer. Early on, for instance, Mexico and the LatAm launch was a very tough market where Argentina turned out to be a very easy growth market when we launched many years ago in LatAm. And when you look at it now, just 2 years after that, it completely switched and Argentina turned out to be harder growth and Mexico was the sort of growth trend driving. And then later on than that, Brazil came kind of from nowhere and started taking over and impacting overall growth a lot. So I think you're going to see us learning and adapting to these markets. Obviously, in the early part, the contribution will be small, but I'm confident that in the coming years that they'll start impacting the results of Spotify very positively.

Okay, great. So that's going to wrap up the Q&A portion of today's earnings call. And actually, I want to turn it back over to Daniel for some closing remarks.

All right. Well, thank you, Bryan, for that. And I wanted also to thank you all for joining the call. I really hope you're as excited about the businesses as we are. We really just feel like we're getting started. And we will continue to accelerate our work and the pace of innovation as we pursue what, in our view, is probably one of the biggest opportunities on the Internet, and that's the one of the creator economy and the role that we want to play in opening that up for more creators. So I look forward to sharing more details at the Investor Day. But first, I'll be talking more about the quarter on our podcast, For The Record, which will go live on our platform tomorrow. I really hope you guys will tune in. Thank you again.

Okay. And 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 again, everyone, for joining.