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    All Dollar Values in Millions: Operating Information

    Uploaded by

    Shubham Sharma
    1) The document provides operating information for Spotify including number of premium subscribers, subscription revenue per subscriber, content costs, tax rates, R&D costs, user data like lifetime and renewal rates, new user acquisition costs and growth rates. 2) It also provides inputs for valuation like risk-free rate, cost of capital options, cash/debt positions, and requests valuation of existing members, new members, advertising revenues and corporate expenses. 3) The valuation outputs provide per user and aggregate values for existing members, new members, advertising revenues and a value drag for corporate expenses, totaling to a value of $19.6B for Spotify's equity.

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    © All Rights Reserved
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    All Dollar Values in Millions: Operating Information

    Uploaded by

    Shubham Sharma
    33 views14 pages
    1) The document provides operating information for Spotify including number of premium subscribers, subscription revenue per subscriber, content costs, tax rates, R&D costs, user data like lifetime and renewal rates, new user acquisition costs and growth rates. 2) It also provides inputs for valuation like risk-free rate, cost of capital options, cash/debt positions, and requests valuation of existing members, new members, advertising revenues and corporate expenses. 3) The valuation outputs provide per user and aggregate values for existing members, new members, advertising revenues and a value drag for corporate expenses, totaling to a value of $19.6B for Spotify's equity.

    Original Description:

    Finance valuation

    Original Title

    SpotifySubscriber2018

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    1) The document provides operating information for Spotify including number of premium subscribers, subscription revenue per subscriber, content costs, tax rates, R&D costs, user data like lifetime and renewal rates, new user acquisition costs and growth rates. 2) It also provides inputs for valuation like risk-free rate, cost of capital options, cash/debt positions, and requests valuation of existing members, new members, advertising revenues and corporate expenses. 3) The valuation outputs provide per user and aggregate values for existing members, new members, advertising revenues and a value drag for corporate expenses, totaling to a value of $19.6B for Spotify's equity.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    33 views14 pages

    All Dollar Values in Millions: Operating Information

    Uploaded by

    Shubham Sharma
    1) The document provides operating information for Spotify including number of premium subscribers, subscription revenue per subscriber, content costs, tax rates, R&D costs, user data like lifetime and renewal rates, new user acquisition costs and growth rates. 2) It also provides inputs for valuation like risk-free rate, cost of capital options, cash/debt positions, and requests valuation of existing members, new members, advertising revenues and corporate expenses. 3) The valuation outputs provide per user and aggregate values for existing members, new members, advertising revenues and a value drag for corporate expenses, totaling to a value of $19.6B for Spotify's equity.

    Copyright:

    © All Rights Reserved
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    Input cell

    Operating Information
    All dollar values in millions
    Number of Premium Subscribers
    Annual Subscription Revenue/ Subscriber
    Preimum Content Cost as % of revenues
    Effective tax rate (current)
    Effective tax rate (steady state)
    Allocated Costs
    R&D, S,G&A costs
    Existing User Data
    Lifetime of a Spotify Subscriber (in years)
    Annual Renewal Probability
    Growth rate in Subscription Charge
    Growth rate in Content Cost/Subscriber
    New User Information
    Total cost of acquiring new users in most recent year
    Growth rate in # Members (Years 1-5)
    Growth rate in # Members (Years 6-10)
    Growth rate in # Members after year 10
    G&A Data
    Growth rate approach for R&D, SG&A
    Growth rate in corporate expenses for next 10 years
    Advertising Revenues
    Advertising Revenues in most recent year
    Expected growth rate in revenues, years 1-5
    Expected growth rate in revenues, years 6-10
    Macroeconomic Data
    Risk free Rate
    Inflation Rate
    Cost of capital for existing users (input choice)
    Cost of capital (existing users)
    Cost of capital for new users (input choice)
    Cost of capital (new users)
    Other Company Data
    Cash & Marketable Securities
    Cross Holdings in Other Companies
    Debt Outstanding
    Equity Options oustanding (value)
    Computed Value

    Most Recent Prior year


    71.00 48.00
    $77.63 $86.75
    79.24%
    25.00% 0.00%
    25.00%

    $814.81

    15.00
    94.5%
    3.00%
    1.50%

    $700.00
    25%
    10%
    1%

    A4. Direct Input


    5.00%
    Do not input
    $ 513.58
    10%
    5%

    2.85%
    2.00%
    B3. Median of Global companies (8.5%)
    8.50%
    B4. 75th percentile of Global companies (10%)
    10.00% Do not input

    $1,863.96
    $1,123.46
    $0.00
    $ 1,659.60
    Notes/Comments

    Number of users , with growth over last year


    Subscription Revenues/ # Users
    Content cost as % of subscription revenues (starting year)
    Effective tax rate in most recent year
    Effective tax rate in steady state

    Total other Costs (other than content and marketing)

    Typical subscriber life with company


    Annual Renewal probability (assumed to be constant over time)
    Growth Rate in Subscription Charge/Subscriber
    Growth rate in Content Cost/Subscriber

    Selling and Marketing Cost in most recent year


    Growth Rate in # Premium Subscribers - Years 1-5
    Growth Rate in # Premium Subscribers - Years 6-10
    Growth Rate in # Premium Subscribers after year 10

    Growth Rate option for total other costs


    DO NOT INPUT

    Total Revenues from Advertising (most recent year)


    Growth rate in advertising revenues - Years 1-5
    Growth rate in advertising revenues - Years 6-10

    Risk free Rate


    Inflation Rate
    Cost of capital option (for existing subscribers)
    DO NOT INPUT
    Cost of capital option (for new subscribers
    DO NOT INPUT

    Cash and Marketable Securities


    Minority Cross Holdings
    Total Debt Outstanding
    Value of Equity Options outstanding
    Valuation Output Summary
    Category
    Existing Members
    New Members
    Advertising Revenues
    Corporate Expenses
    Value of Spotify Premium
    Corporate Expense Growth
    A1. Grow at same rate as total users 16.73%
    A2. Grow at inflation rate 2.00%
    A3. Grow at risk free rate 2.85%
    A4. Direct Input 5.00%

    Cost of Capital (in euros)


    B1. Lowest decile of Global companies (7%) 7.00%
    b2. 25th percentile of Global companies (7.5%) 7.50%
    B3. Median of Global companies (8.5%) 8.50%
    B4. 75th percentile of Global companies (10%) 10.00%
    B5. Ninth decile of Global companies (12%) 12.00%
    B6. Direct input 9.24%

    tion Output Summary


    Value per user Aggregate Value
    $ 108.65 $7,714
    $ 81.35 $20,765
    $2,922
    $13,140
    $21,248
    Value of Premium Subscribers
    Base Year 1 2
    Life Indicator 1 1
    Membership Survival 1.0000 0.9450 0.8930
    Revenue/Subscriber $ 77.63 $ 79.96 $ 82.36
    Content Cost/ Subscriber $ 61.51 $ 62.44 $ 63.37
    Operating Profit/Loss per Subscriber $ 16.12 $ 17.52 $ 18.98
    Tax rate 25.00% 25.000% 25.000%
    After-tax Operating Income $12.09 $12.42 $12.72
    Present Value (at Cost of Capital) $11.45 $10.80
    Life of subscriber = 15.00
    Value per Subscriber = $108.65
    Number of Premium Subscribers = 71.00
    Value of Premium Subscribers = $ 7,714.28

    Value of New Premium Subscribers


    Cost of acquiring New Subscriber = $ 27.30
    Value per new user (in today's $) = $81.35

    Base Year 1 2
    Total Subscribers 71.00 84.85 106.06
    New Subscribers 0.00 17.75 25.88
    Value per Subscriber $81.35 $82.98 $84.64
    Value added by new Subscribers $1,472.86 $2,190.22
    Terminal Value (New Subscribers)
    Present Value $ 1,338.96 $ 1,810.10
    Value Added by New Users $ 20,764.56

    Value of Advertising Revenues


    Base Year 1 2
    Advertising Revenue $ 513.58 $ 564.94 $ 621.43
    - Content Costs $ 406.96 $ 441.14 $ 478.18
    Operating Income $ 106.62 $ 123.80 $ 143.25
    After-tax Operating Income $ 79.96 $ 92.85 $ 107.44
    Terminal Value
    PV of After-tax Operating Income $ 85.58 $ 91.26
    Value of Advertising Business $ 2,921.70

    Value Drag of Corporate Expenses (Cost)


    Base Year 1 2
    Total R&D & G&A Costs $ 814.81
    Corporate Expenses $814.81 $855.56 $898.33
    After-tax Corporate Expenses $ 641.67 $ 673.75
    Terminal Value (Corporate Exp)
    PV of Corporate Expenses $591.40 $572.32
    Value Drag of Corporate Expenses $13,139.75

    Valuing Spotify
    Value of Existing Subscribers $7,714.28
    Value of New Subscribers $20,764.56
    Value of Advertising Business $2,921.70
    - PV of Corporate Expenses $13,139.75
    Value of Spotify Operating Assets $18,260.80
    + Cash & Cross Holdings $2,987.42
    - Debt $0.00
    Value of Equity $21,248.22
    - Value of Equity Options $ 1,659.60
    Value of Equity in common stock $19,588.61
    3 4 5 6 7 8 9
    1 1 1 1 1 1 1
    0.8439 0.7975 0.7536 0.7122 0.6730 0.6360 0.6010
    $ 84.83 $ 87.37 $ 89.99 $ 92.69 $ 95.47 $ 98.34 $ 101.29
    $ 64.32 $ 65.29 $ 66.27 $ 67.59 $ 68.94 $ 70.32 $ 71.73
    $ 20.50 $ 22.08 $ 23.73 $ 25.10 $ 26.53 $ 28.02 $ 29.56
    25.000% 25.000% 25.000% 25.000% 25.000% 25.000% 25.000%
    $12.98 $13.21 $13.41 $13.41 $13.39 $13.36 $13.32
    $10.16 $9.53 $8.92 $8.22 $7.56 $6.96 $6.39

    3 4 5 6 7 8 9
    132.57 165.71 207.14 227.86 250.64 275.70 303.28
    32.35 40.43 50.54 32.11 35.32 38.85 42.73
    $86.33 $88.06 $89.82 $91.61 $93.45 $95.32 $97.22
    $2,792.53 $3,560.48 $4,539.61 $2,941.44 $3,300.30 $3,702.94 $4,154.70

    $ 2,098.07 $ 2,431.85 $ 2,818.74 $ 1,660.37 $ 1,693.58 $ 1,727.45 $ 1,762.00

    3 4 5 6 7 8 9
    $ 683.58 $ 751.93 $ 827.13 $ 868.48 $ 911.91 $ 957.50 $ 1,005.38
    $ 518.34 $ 561.87 $ 609.06 $ 633.30 $ 658.51 $ 684.73 $ 711.98
    $ 165.23 $ 190.06 $ 218.07 $ 235.18 $ 253.39 $ 272.78 $ 293.39
    $ 123.92 $ 142.54 $ 163.55 $ 176.38 $ 190.04 $ 204.58 $ 220.05

    $ 97.02 $ 102.86 $ 108.77 $ 108.11 $ 107.36 $ 106.52 $ 105.60

    3 4 5 6 7 8 9

    $943.25 $990.41 $1,039.93 $1,091.93 $1,146.53 $1,203.85 $1,264.05


    $ 707.44 $ 742.81 $ 779.95 $ 818.95 $ 859.89 $ 902.89 $ 948.03

    $553.86 $535.99 $518.70 $501.97 $485.78 $470.11 $454.94


    10 11 12 13 14 15 16
    1 1 1 1 1 1 0
    0.5680 0.5367 0.5072 0.4793 0.4529 0.4280 0.4045
    $ 104.33 $ 107.46 $ 110.68 $ 114.00 $ 117.42 $ 120.94 $ 124.57
    $ 73.16 $ 74.63 $ 76.12 $ 77.64 $ 79.20 $ 80.78 $ 82.40
    $ 31.16 $ 32.83 $ 34.56 $ 36.36 $ 38.23 $ 40.16 $ 42.18
    25.00% 25.00% 25.00% 25.00% 25.00% 25.00% 25.00%
    $13.27 $13.22 $13.15 $13.07 $12.99 $12.89 $0.00
    $5.87 $5.39 $4.94 $4.53 $4.14 $3.79 $0.00

    10
    333.60
    47.01
    $99.17
    $4,661.57
    $4,217.97
    $ 3,423.45

    10
    $ 1,055.65
    $ 740.32
    $ 315.32
    $ 236.49
    $ 4,304.99
    $ 2,008.63

    10

    $1,327.25
    $ 995.44
    $ 18,120.45
    $8,454.68
    17 18 19 20
    0 0 0 0
    0.3822 0.3612 0.3414 0.3226
    $ 128.31 $ 132.16 $ 136.12 $ 140.21
    $ 84.04 $ 85.72 $ 87.44 $ 89.19
    $ 44.27 $ 46.43 $ 48.69 $ 51.02
    25.00% 25.00% 25.00% 25.00%
    $0.00 $0.00 $0.00 $0.00
    $0.00 $0.00 $0.00 $0.00
    Yes or No Cost of capital
    Yes Lowest decile of US companies (7%)
    No 25th percentile of US companies (7.5%)
    Median of US companies (8%)
    75th percentile of US companies (10%)
    Ninth decile of US companies (12%)
    Direct input

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