6-K 1 ck0001639920-6k_20200729.htm 6-K ck0001639920-6k_20200729.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, 2020

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, 2020

 

 


 

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

 

6

Notes to the interim condensed consolidated financial statements

 

7

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

 

24

Item 3. Quantitative and Qualitative Disclosures About Market Risk

 

38

PART II – OTHER INFORMATION

 

 

Item 1. Legal Proceedings

 

41

Item 1A. Risk Factors

 

42

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

 

43

Item 3. Defaults Upon Senior Securities

 

43

Item 5. Other Information

 

43

Signatures

 

44

 

 

 

 


Table of Contents

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

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Revenue

 

5

 

 

1,889

 

 

 

1,667

 

 

 

3,737

 

 

 

3,178

 

Cost of revenue

 

 

 

 

1,410

 

 

 

1,233

 

 

 

2,786

 

 

 

2,371

 

Gross profit

 

 

 

 

479

 

 

 

434

 

 

 

951

 

 

 

807

 

Research and development

 

 

 

 

267

 

 

 

151

 

 

 

429

 

 

 

306

 

Sales and marketing

 

 

 

 

248

 

 

 

200

 

 

 

479

 

 

 

372

 

General and administrative

 

 

 

 

131

 

 

 

86

 

 

 

227

 

 

 

179

 

 

 

 

 

 

646

 

 

 

437

 

 

 

1,135

 

 

 

857

 

Operating loss

 

 

 

 

(167

)

 

 

(3

)

 

 

(184

)

 

 

(50

)

Finance income

 

6

 

 

6

 

 

 

8

 

 

 

76

 

 

 

42

 

Finance costs

 

6

 

 

(294

)

 

 

(64

)

 

 

(306

)

 

 

(220

)

Finance income/(costs) - net

 

 

 

 

(288

)

 

 

(56

)

 

 

(230

)

 

 

(178

)

Loss before tax

 

 

 

 

(455

)

 

 

(59

)

 

 

(414

)

 

 

(228

)

Income tax (benefit)/expense

 

7

 

 

(99

)

 

 

17

 

 

 

(59

)

 

 

(10

)

Net loss attributable to owners

   of the parent

 

 

 

 

(356

)

 

 

(76

)

 

 

(355

)

 

 

(218

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share attributable to owners

   of the parent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Basic and diluted

 

8

 

 

(1.91

)

 

 

(0.42

)

 

 

(1.91

)

 

 

(1.21

)

Weighted-average ordinary shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Basic and diluted

 

8

 

 

186,552,877

 

 

 

180,409,115

 

 

 

185,799,600

 

 

 

180,510,763

 

 

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

 


-1-


Table of Contents

Interim condensed consolidated statement of comprehensive loss

(Unaudited)

(in € millions)

 

 

 

 

 

Three months ended June 30,

 

 

Six months ended June 30,

 

 

 

Note

 

2020

 

 

2019

 

 

2020

 

 

2019

 

Net loss attributable to owners

   of the parent

 

 

 

 

(356

)

 

 

(76

)

 

 

(355

)

 

 

(218

)

Other comprehensive income/(loss):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Items that may be subsequently reclassified to

   condensed consolidated statement of operations

   (net of tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Change in net unrealized gain or loss on

      short term investments

 

13, 19

 

 

4

 

 

 

3

 

 

 

7

 

 

 

6

 

   Change in net unrealized gain or loss on

      cash flow hedging instruments

 

13, 19

 

 

(5

)

 

 

5

 

 

 

6

 

 

 

2

 

   Change in foreign currency translation adjustment

 

 

 

 

(3

)

 

 

(2

)

 

 

(2

)

 

 

2

 

Items not to be subsequently reclassified to

   condensed consolidated statement of operations

  (net of tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

   Gains/(losses) in the fair value of long term investments

 

13, 19

 

 

329

 

 

 

(330

)

 

 

174

 

 

 

188

 

Other comprehensive income/(loss) for the

   period (net of tax)

 

 

 

 

325

 

 

 

(324

)

 

 

185

 

 

 

198

 

Total comprehensive loss for the period

   attributable to owners of the parent

 

 

 

 

(31

)

 

 

(400

)

 

 

(170

)

 

 

(20

)

 

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

 

-2-


Table of Contents

Interim condensed consolidated statement of financial position

(in € millions)

 

 

 

Note

 

 

June 30, 2020

 

 

December 31, 2019

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Non-current assets

 

 

 

 

 

 

 

 

 

 

 

 

Lease right-of-use assets

 

 

9

 

 

 

476

 

 

 

489

 

Property and equipment

 

 

10

 

 

 

287

 

 

 

291

 

Goodwill

 

 

11

 

 

 

617

 

 

 

478

 

Intangible assets

 

 

11

 

 

 

86

 

 

 

58

 

Long term investments

 

 

19

 

 

 

1,725

 

 

 

1,497

 

Restricted cash and other non-current assets

 

 

12

 

 

 

66

 

 

 

69

 

Deferred tax assets

 

 

7

 

 

 

13

 

 

 

9

 

 

 

 

 

 

 

 

3,270

 

 

 

2,891

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other receivables

 

 

15

 

 

 

361

 

 

 

402

 

Income tax receivable

 

 

 

 

 

 

4

 

 

 

4

 

Short term investments

 

 

19

 

 

 

636

 

 

 

692

 

Cash and cash equivalents

 

 

 

 

 

 

1,148

 

 

 

1,065

 

Other current assets

 

 

 

 

 

 

115

 

 

 

68

 

 

 

 

 

 

 

 

2,264

 

 

 

2,231

 

Total assets

 

 

 

 

 

 

5,534

 

 

 

5,122

 

Equity and liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

 

 

Share capital

 

 

 

 

 

 

 

 

 

 

Other paid in capital

 

 

 

 

 

 

4,175

 

 

 

4,192

 

Treasury shares

 

 

13

 

 

 

(175

)

 

 

(370

)

Other reserves

 

 

13

 

 

 

1,187

 

 

 

924

 

Accumulated deficit

 

 

 

 

 

 

(3,064

)

 

 

(2,709

)

Equity attributable to owners of the parent

 

 

 

 

 

 

2,123

 

 

 

2,037

 

Non-current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Lease liabilities

 

 

9

 

 

 

612

 

 

 

622

 

Accrued expenses and other liabilities

 

 

17

 

 

 

37

 

 

 

20

 

Provisions

 

 

18

 

 

 

2

 

 

 

2

 

Deferred tax liabilities

 

 

7

 

 

 

1

 

 

 

2

 

 

 

 

 

 

 

 

652

 

 

 

646

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

Trade and other payables

 

 

16

 

 

 

555

 

 

 

549

 

Income tax payable

 

 

 

 

 

 

4

 

 

 

9

 

Deferred revenue

 

 

 

 

 

 

349

 

 

 

319

 

Accrued expenses and other liabilities

 

 

17

 

 

 

1,527

 

 

 

1,438

 

Provisions

 

 

18

 

 

 

12

 

 

 

13

 

Derivative liabilities

 

 

19

 

 

 

312

 

 

 

111

 

 

 

 

 

 

 

 

2,759

 

 

 

2,439

 

Total liabilities

 

 

 

 

 

 

3,411

 

 

 

3,085

 

Total equity and liabilities

 

 

 

 

 

 

5,534

 

 

 

5,122

 

 

 

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

-3-


Table of Contents

Interim condensed consolidated statement of changes in equity

(Unaudited)

(in € millions)

 

 

Note

 

Share

capital

 

 

Other

paid in

capital

 

 

Treasury

Shares

 

 

Other

reserves

 

 

Accumulated

deficit

 

 

Equity

attributable to

owners of the parent

 

Balance at January 1, 2020

 

 

 

 

 

 

 

4,192

 

 

 

(370

)

 

 

924

 

 

 

(2,709

)

 

 

2,037

 

Income for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

Other comprehensive loss

 

 

 

 

 

 

 

 

 

 

 

 

 

(140

)

 

 

 

 

 

(140

)

Issuance of shares upon exercise of stock

   options, restricted stock units, and

   contingently issuable shares

 

14

 

 

 

 

 

(113

)

 

 

190

 

 

 

 

 

 

 

 

 

77

 

Restricted stock units withheld for

   employee taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

(3

)

 

 

 

 

 

(3

)

Share-based payments

 

14

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

 

 

 

39

 

Income tax impact associated with

   share-based payments

 

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Balance at March 31, 2020

 

 

 

 

 

 

 

4,079

 

 

 

(180

)

 

 

822

 

 

 

(2,708

)

 

 

2,013

 

Loss for the period

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(356

)

 

 

(356

)

Other comprehensive income

 

 

 

 

 

 

 

 

 

 

 

 

 

325

 

 

 

 

 

 

325

 

Issuance of shares upon exercise of stock

   options and restricted stock units

 

14

 

 

 

 

 

96

 

 

 

5

 

 

 

 

 

 

 

 

 

101

 

Restricted stock units withheld for employee taxes

 

 

 

 

 

 

 

 

 

 

 

 

 

(5

)

 

 

 

 

 

(5

)

Share-based payments

 

14

 

 

 

 

 

 

 

 

 

 

 

51

 

 

 

 

 

 

51

 

Income tax impact associated with

   share-based payments

 

 

 

 

 

 

 

 

 

 

 

 

 

(6

)

 

 

 

 

 

(6

)

Balance at June 30, 2020

 

 

 

 

 

 

 

4,175

 

 

 

(175

)

 

 

1,187

 

 

 

(3,064

)

 

 

2,123

 

 

-4-


Table of Contents

 

 

Note

 

Share

capital

 

 

Other

paid in

capital

 

 

Treasury

Shares

 

 

Other

reserves

 

 

Accumulated

deficit

 

 

Equity

attributable to

owners of the parent

 

Balance at January 1, 2019

 

 

 

 

 

 

 

3,801

 

 

 

(77

)

 

 

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

 

 

 

 

 

 

 

3,834

 

 

 

(198

)

 

 

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

 

 

 

 

 

 

 

3,854

 

 

 

(365

)

 

 

1,197

 

 

 

(2,741

)

 

 

1,945

 

 

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

-5-


Table of Contents

Interim condensed consolidated statement of cash flows

(Unaudited)

(in € millions)

 

 

 

 

Six months ended June 30,

 

 

 

Note

 

2020

 

 

2019

 

Operating activities

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

 

 

(355

)

 

 

(218

)

Adjustments to reconcile net loss to net cash flows

 

 

 

 

 

 

 

 

 

 

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

 

9, 10

 

 

44

 

 

 

34

 

Amortization of intangible assets

 

11

 

 

10

 

 

 

7

 

Share-based payments expense

 

14

 

 

87

 

 

 

63

 

Finance income

 

6

 

 

(76

)

 

 

(42

)

Finance costs

 

6

 

 

306

 

 

 

220

 

Income tax benefit

 

7

 

 

(59

)

 

 

(10

)

Other

 

 

 

 

6

 

 

 

(2

)

Changes in working capital:

 

 

 

 

 

 

 

 

 

 

Increase in trade receivables and other assets

 

 

 

 

(17

)

 

 

(15

)

Increase in trade and other liabilities

 

 

 

 

88

 

 

 

230

 

Increase in deferred revenue

 

 

 

 

30

 

 

 

32

 

(Decrease)/increase in provisions

 

18

 

 

(1

)

 

 

8

 

Interest paid on lease liabilities

 

9

 

 

(30

)

 

 

(13

)

Interest received

 

 

 

 

3

 

 

 

8

 

Income tax paid

 

 

 

 

(6

)

 

 

(3

)

Net cash flows from operating activities

 

 

 

 

30

 

 

 

299

 

Investing activities

 

 

 

 

 

 

 

 

 

 

Business combinations, net of cash acquired

 

4

 

 

(137

)

 

 

(324

)

Purchases of property and equipment

 

10

 

 

(26

)

 

 

(77

)

Purchases of short term investments

 

19

 

 

(643

)

 

 

(402

)

Sales and maturities of short term investments

 

19

 

 

719

 

 

 

753

 

Change in restricted cash

 

12

 

 

2

 

 

 

1

 

Other

 

 

 

 

(21

)

 

 

(7

)

Net cash flows used in investing activities

 

 

 

 

(106

)

 

 

(56

)

Financing activities

 

 

 

 

 

 

 

 

 

 

Proceeds from exercise of stock options

 

14

 

 

178

 

 

 

53

 

Repurchases of ordinary shares

 

13

 

 

 

 

 

(283

)

Payments of lease liabilities

 

9

 

 

(10

)

 

 

(9

)

Lease incentives received

 

9

 

 

7

 

 

 

 

Other

 

 

 

 

(8

)

 

 

 

Net cash flows from/(used in) financing activities

 

 

 

 

167

 

 

 

(239

)

Net increase in cash and cash equivalents

 

 

 

 

91

 

 

 

4

 

Cash and cash equivalents at beginning of the period

 

 

 

 

1,065

 

 

 

891

 

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

 

 

 

 

(8

)

 

 

14

 

Cash and cash equivalents at June 30

 

 

 

 

1,148

 

 

 

909

 

Supplemental disclosure of cash flow information

 

 

 

 

 

 

 

 

 

 

Non-cash investing and financing activities