6-K 1 ck0001639920-6k_20190630.htm 6-K ck0001639920-6k_20190630.htm

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 6-K

 

 

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13a-16 OR 15d-16

UNDER THE SECURITIES EXCHANGE ACT OF 1934

For the month of July, 2019

Commission File Number: 001-38438

Spotify Technology S.A.

(Translation of registrant’s name into English)

42-44, avenue de la Gare

L-1610 Luxembourg

Grand Duchy of Luxembourg

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F      Form 40-F  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):

Yes      No  

 

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):

Yes      No  

 

 

 

 

 


 

 

 

 

 

 

 

 

 

Spotify Technology S.A.

Interim condensed consolidated financial statements

For the three and six months ended June 30, 2019

 


Table of contents

 

 

 

Page

PART I – FINANCIAL INFORMATION

 

 

Item 1. Financial Statements

 

1

Interim condensed consolidated statement of operations

 

1

Interim condensed consolidated statement of comprehensive loss

 

2

Interim condensed consolidated statement of financial position

 

3

Interim condensed consolidated statement of changes in equity

 

4

Interim condensed consolidated statement of cash flows

 

5

Notes to the interim condensed consolidated financial statements

 

6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

28

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

42

PART II – OTHER INFORMATION

 

 

Item 1. Legal Proceedings

 

44

Item 1A. Risk Factors

 

45

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

45

Item 3. Defaults Upon Senior Securities

 

45

Item 5. Other Information

 

45

Signatures

 

46

 

 

 


PART I – FINANCIAL INFORMATION

Item 1. Financial Statements

Interim condensed consolidated statement of operations

(Unaudited)

(in € millions, except share and per share data)

 

 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

Note

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Revenue

 

5

 

 

1,667

 

 

 

1,273

 

 

 

3,178

 

 

 

2,412

 

Cost of revenue

 

 

 

 

1,233

 

 

 

944

 

 

 

2,371

 

 

 

1,800

 

Gross profit

 

 

 

 

434

 

 

 

329

 

 

 

807

 

 

 

612

 

Research and development

 

 

 

 

151

 

 

 

143

 

 

 

306

 

 

 

258

 

Sales and marketing

 

 

 

 

200

 

 

 

173

 

 

 

372

 

 

 

311

 

General and administrative

 

 

 

 

86

 

 

 

103

 

 

 

179

 

 

 

174

 

 

 

 

 

 

437

 

 

 

419

 

 

 

857

 

 

 

743

 

Operating loss

 

 

 

 

(3

)

 

 

(90

)

 

 

(50

)

 

 

(131

)

Finance income

 

6

 

 

8

 

 

 

41

 

 

 

42

 

 

 

56

 

Finance costs

 

6

 

 

(64

)

 

 

(343

)

 

 

(220

)

 

 

(497

)

Finance income/(costs) - net

 

 

 

 

(56

)

 

 

(302

)

 

 

(178

)

 

 

(441

)

Loss before tax

 

 

 

 

(59

)

 

 

(392

)

 

 

(228

)

 

 

(572

)

Income tax expense/(benefit)

 

7

 

 

17

 

 

 

2

 

 

 

(10

)

 

 

(9

)

Net loss attributable to owners

   of the parent

 

 

 

 

(76

)

 

 

(394

)

 

 

(218

)

 

 

(563

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share attributable to owners

   of the parent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Basic and diluted

 

8

 

 

(0.42

)

 

 

(2.20

)

 

 

(1.21

)

 

 

(3.25

)

Weighted-average ordinary shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Basic and diluted

 

8

 

 

180,409,115

 

 

 

179,077,124

 

 

 

180,510,763

 

 

 

173,459,249

 

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

 


-1-


Interim condensed consolidated statement of comprehensive loss

(Unaudited)

(in € millions)

 

 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

Note

 

2019

 

 

2018

 

 

2019

 

 

2018

 

Net loss attributable to owners

   of the parent

 

 

 

 

(76

)

 

 

(394

)

 

 

(218

)

 

 

(563

)

Other comprehensive (loss)/income:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be subsequently reclassified to

   condensed consolidated statement of operations

   (net of tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Gains on short term investments

 

13, 19

 

 

3

 

 

 

1

 

 

 

6

 

 

 

 

   Gains on cash flow hedging instruments

 

13, 19

 

 

5

 

 

 

 

 

 

2

 

 

 

 

   Exchange differences on translation of foreign

     operations

 

 

 

 

(2

)

 

 

4

 

 

 

2

 

 

 

(11

)

Items not to be subsequently reclassified to

   condensed consolidated statement of operations

  (net of tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   (Losses)/gains in the fair value of long term investments

 

13, 19

 

 

(330

)

 

 

1

 

 

 

188

 

 

 

46

 

Other comprehensive (loss)/income for the

   period (net of tax)

 

 

 

 

(324

)

 

 

6

 

 

 

198

 

 

 

35

 

Total comprehensive loss for the period

   attributable to owners of the parent

 

 

 

 

(400

)

 

 

(388

)

 

 

(20

)

 

 

(528

)

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

 

-2-


Interim condensed consolidated statement of financial position

(in € millions)

 

 

 

Note

 

 

June 30, 2019

 

 

December 31, 2018

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

Lease right-of-use assets

 

 

9

 

 

 

398

 

 

 

 

Property and equipment

 

 

10

 

 

 

243

 

 

 

197

 

Goodwill

 

 

11

 

 

 

464

 

 

 

146

 

Intangible assets

 

 

11

 

 

 

55

 

 

 

28

 

Long term investments

 

 

19

 

 

 

1,883

 

 

 

1,646

 

Restricted cash and other non-current assets

 

 

12

 

 

 

68

 

 

 

65

 

Deferred tax assets

 

 

7

 

 

 

10

 

 

 

8

 

 

 

 

 

 

 

 

3,121

 

 

 

2,090

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

15

 

 

 

429

 

 

 

400

 

Income tax receivable

 

 

 

 

 

 

2

 

 

 

2

 

Short term investments

 

 

19

 

 

 

586

 

 

 

915

 

Cash and cash equivalents

 

 

 

 

 

 

909

 

 

 

891

 

Other current assets

 

 

 

 

 

 

66

 

 

 

38

 

 

 

 

 

 

 

 

1,992

 

 

 

2,246

 

Total assets

 

 

 

 

 

 

5,113

 

 

 

4,336

 

Equity and liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

 

 

 

 

 

 

 

Other paid in capital

 

 

 

 

 

 

3,854

 

 

 

3,801

 

Treasury shares

 

 

13

 

 

 

(365

)

 

 

(77

)

Other reserves

 

 

13

 

 

 

1,197

 

 

 

875

 

Accumulated deficit

 

 

 

 

 

 

(2,741

)

 

 

(2,505

)

Equity attributable to owners of the parent

 

 

 

 

 

 

1,945

 

 

 

2,094

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Lease liabilities

 

 

9

 

 

 

517

 

 

 

 

Accrued expenses and other liabilities

 

 

17

 

 

 

11

 

 

 

85

 

Provisions

 

 

18

 

 

 

5

 

 

 

8

 

Deferred tax liabilities

 

 

7

 

 

 

2

 

 

 

2

 

 

 

 

 

 

 

 

535

 

 

 

95

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

16

 

 

 

440

 

 

 

427

 

Income tax payable

 

 

 

 

 

 

4

 

 

 

5

 

Deferred revenue

 

 

 

 

 

 

290

 

 

 

258

 

Accrued expenses and other liabilities

 

 

17

 

 

 

1,327

 

 

 

1,076

 

Provisions

 

 

18

 

 

 

53

 

 

 

42

 

Derivative liabilities

 

 

19

 

 

 

519

 

 

 

339

 

 

 

 

 

 

 

 

2,633

 

 

 

2,147

 

Total liabilities

 

 

 

 

 

 

3,168

 

 

 

2,242

 

Total equity and liabilities

 

 

 

 

 

 

5,113

 

 

 

4,336

 

 

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

-3-


Interim condensed consolidated statement of changes in equity

(Unaudited)

(in € millions)

 

 

Note

 

Share

capital

 

 

Treasury

Shares

 

 

Other

paid in

capital

 

 

Other

reserves

 

 

Accumulated

deficit

 

 

Equity

attributable to

owners of the parent

 

Balance at January 1, 2018

 

 

 

 

 

 

 

 

 

 

2,488

 

 

 

177

 

 

 

(2,427

)

 

 

238

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(169

)

 

 

(169

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

30

 

 

 

 

 

 

30

 

Issuance of ordinary shares

 

 

 

 

 

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

4

 

Issuance of shares upon exercise of stock

   options and restricted stock units

 

14

 

 

 

 

 

 

 

 

39

 

 

 

 

 

 

 

 

 

39

 

Share-based payments

 

14

 

 

 

 

 

 

 

 

 

 

 

18

 

 

 

 

 

 

18

 

Income tax impact associated with

   share-based payments

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Balance at March 31, 2018

 

 

 

 

 

 

 

 

 

 

2,531

 

 

 

226

 

 

 

(2,596

)

 

 

161

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(394

)

 

 

(394

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

5

 

 

 

 

 

 

5

 

Issuance of shares upon exercise of stock

   options and restricted stock units

 

14

 

 

 

 

 

 

 

 

57

 

 

 

 

 

 

 

 

 

57

 

Issuance of shares upon exchange of

   Convertible Notes

 

19

 

 

 

 

 

 

 

 

1,145

 

 

 

 

 

 

 

 

 

1,145

 

Share-based payments

 

14

 

 

 

 

 

 

 

 

 

 

 

24

 

 

 

 

 

 

24

 

Income tax impact associated with

   share-based payments

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

 

 

 

1

 

Balance at June 30, 2018

 

 

 

 

 

 

 

 

 

 

3,733

 

 

 

256

 

 

 

(2,990

)

 

 

999

 

Balance at December 31, 2018

 

 

 

 

 

 

 

(77

)

 

 

3,801

 

 

 

875

 

 

 

(2,505

)

 

 

2,094

 

Cumulative effect adjustment in connection

   with the adoption of IFRS 16

 

9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(18

)

 

 

(18

)

Balance at January 1, 2019

 

 

 

 

 

 

 

(77

)

 

 

3,801

 

 

 

875

 

 

 

(2,523

)

 

 

2,076

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(142

)

 

 

(142

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

522

 

 

 

 

 

 

522

 

Issuance of share-based payments in

   conjunction with business combinations

 

4

 

 

 

 

 

 

 

 

 

 

 

13

 

 

 

 

 

 

13

 

Repurchases of ordinary shares

 

13

 

 

 

 

 

(121

)

 

 

 

 

 

 

 

 

 

 

 

(121

)

Issuance of shares upon exercise of stock

   options and restricted stock units

 

14

 

 

 

 

 

 

 

 

33

 

 

 

 

 

 

 

 

 

33

 

Share-based payments

 

14

 

 

 

 

 

 

 

 

 

 

 

27

 

 

 

 

 

 

27

 

Income tax impact associated with

   share-based payments

 

 

 

 

 

 

 

 

 

 

 

 

 

54

 

 

 

 

 

 

54

 

Balance at March 31, 2019

 

 

 

 

 

 

 

(198

)

 

 

3,834

 

 

 

1,491

 

 

 

(2,665

)

 

 

2,462

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(76

)

 

 

(76

)

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(324

)

 

 

 

 

 

(324

)

Repurchases of ordinary shares

 

13

 

 

 

 

 

(167

)

 

 

 

 

 

 

 

 

 

 

 

(167

)

Issuance of shares upon exercise of stock

   options and restricted stock units

 

14

 

 

 

 

 

 

 

 

20

 

 

 

 

 

 

 

 

 

20

 

Restricted stock units withheld for employee taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Share-based payments

 

14

 

 

 

 

 

 

 

 

 

 

 

38

 

 

 

 

 

 

38

 

Income tax impact associated with

   share-based payments

 

 

 

 

 

 

 

 

 

 

 

 

 

(7

)

 

 

 

 

 

(7

)

Balance at June 30, 2019

 

 

 

 

 

 

 

(365

)

 

 

3,854

 

 

 

1,197

 

 

 

(2,741

)

 

 

1,945

 

 

The accompanying notes are an integral part of the interim condensed consolidated financial statements.

-4-


Interim condensed consolidated statement of cash flows

(Unaudited)

(in € millions)

 

 

 

 

Six months ended June 30,

 

 

 

Note

 

2019

 

 

2018

 

Operating activities

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

(218

)

 

 

(563

)

Adjustments to reconcile net loss to net cash flows

 

 

 

 

 

 

 

 

 

 

Depreciation of property and equipment and lease right-of-use assets

 

9, 10

 

 

34

 

 

 

13

 

Amortization of intangible assets

 

11

 

 

7

 

 

 

4

 

Share-based payments expense

 

14

 

 

63

 

 

 

41

 

Finance income

 

6

 

 

(42

)

 

 

(56

)

Finance costs

 

6

 

 

220

 

 

 

497

 

Income tax benefit

 

7

 

 

(10

)

 

 

(9

)

Other

 

 

 

 

(2

)

 

 

(2

)

Changes in working capital:

 

 

 

 

 

 

 

 

 

 

(Increase)/decrease in trade receivables and other assets

 

 

 

 

(15

)

 

 

27

 

Increase in trade and other liabilities

 

 

 

 

230

 

 

 

148

 

Increase in deferred revenue

 

 

 

 

32

 

 

 

16

 

Increase/(decrease) in provisions

 

18

 

 

8

 

 

 

(7

)

Interest paid on lease liabilities

 

9

 

 

(13

)

 

 

 

Interest received

 

 

 

 

8

 

 

 

12

 

Income tax paid

 

 

 

 

(3

)

 

 

(7

)

Net cash flows from operating activities

 

 

 

 

299

 

 

 

114

 

Investing activities

 

 

 

 

 

 

 

 

 

 

Business combinations, net of cash acquired

 

4

 

 

(324

)

 

 

(9

)

Purchases of property and equipment

 

10

 

 

(77

)

 

 

(11

)

Purchases of short term investments

 

19

 

 

(402

)

 

 

(715

)

Sales and maturities of short term investments

 

19

 

 

753

 

 

 

881

 

Change in restricted cash

 

12

 

 

1

 

 

 

(11

)

Other

 

 

 

 

(7

)

 

 

(13

)

Net cash flows (used in)/from investing activities

 

 

 

 

(56

)

 

 

122

 

Financing activities

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of share options

 

14

 

 

53

 

 

 

96

 

Payments of lease liabilities

 

9

 

 

(9

)

 

 

 

Repurchases of ordinary shares

 

13

 

 

(283

)

 

 

 

Other

 

 

 

 

 

 

 

2

 

Net cash flows (used in)/from financing activities

 

 

 

 

(239

)

 

 

98

 

Net increase in cash and cash equivalents

 

 

 

 

4

 

 

 

334

 

Cash and cash equivalents at beginning of the period

 

 

 

 

891

 

 

 

477

 

Net foreign exchange gains/(losses) on cash and cash equivalents

 

 

 

 

14

 

 

 

(1

)

Cash and cash equivalents at June 30

 

 

 

 

909

 

 

 

810

 

Supplemental disclosure of cash flow information