Spotify Technology S.A. (SPOT) Q3 2018 Earnings Conference Call Transcript

Spotify Technology S.A. (SPOT 0.20%)
Q3 2018 Earnings Conference Call
Nov. 1, 2018, 8:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Welcome to Spotify's Third Quarter 2018 Financial Results Question and Answer Session. A copy of the company's shareholder letter, issued pre-market-open today, is available on the Investor Relations website, investors.spotify.com. This call is being recorded and an archived replay will be available on the IR site after the event concludes. I will now turn the call over to Paul Vogel, Head of Investor Relations and FP&A. You may now begin your conference.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Great. Thank you, and welcome to Spotify's Third Quarter 2018 Earnings Conference Call. With us today are Daniel Ek, Spotify's CEO, and Barry McCarthy, Spotify's CFO. The format of today's call will be similar to prior quarters. Daniel will give a few brief opening remarks followed by a question and answer session. Questions can be submitted either through the widget alongside the webcast or by emailing directly to [email protected]. We'll get to as many questions as we can, and the call will last approximately 30 minutes.

Before we begin, let me quickly cover the Safe Harbor. During this call, we will make 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, and in our letter to shareholders, and filings with the Securities and Exchange Commission. During this call, we will refer to certain non-IFRS financial measures. Reconciliations between our IFRS and non-IFRS financial measures can be found in our letter to shareholders on the financial section of the Investor Relations page on our website, and also furnished today on Form 6K. And, with that, let me turn it over to Daniel for a few brief opening remarks.

Daniel Ek -- Chief Executive Officer

All right. Thanks, Paul, and thanks, everyone, for joining today's call. Our third-quarter results demonstrated continuing strong growth across our business, and most of our key metrics finished toward the top end of our forecast ranges. As we have discussed on prior calls and at the Investor Day, we continue to be focused on building out our two-sided marketplace. In this quarter, we launched a number of new tools and services for artists, including a direct upload feature for independent artists, a playlist submission for creators looking for ways to get their music onto our editorial playlists, and enhanced functionality -- really, across all of Spotify for Artists. And today, approximately 250,000 creators use Spotify for Artists on a monthly basis, and we expect these tools to help us continue to provide the largest opportunity for the widest group of creators and artists.

This quarter, we also announced several important partnerships that represent significant opportunities for growth and additional value for new users and existing subscribers. In the U.S., just yesterday, we announced a new partnership with Google where new and existing Spotify Family Plan master account holders can receive a Google Home Mini as part of their subscription, and we see great potential in this partnership. As we've said before, we made an early strategic bet on connected speakers back in 2014, when we were on the very first Google Home voice speakers to be shipped. Now, as connected speakers become more and more important to consumers, we're excited to be adding to our momentum with speakers and voice, and we will continue to build on our partnership with Google over the coming months.

In the quarter, we also announced a long-term agreement to be the out-of-the-box music service on Samsung devices, and we introduced our first multipartner bundle in the U.S. with Hulu and Showtime, and we entered into partnership with Skye, which is Europe's largest paid TV service, to allow users in the U.K. and Ireland to add Spotify directly to their cable bill, and we announced a partnership with DAZN, a fast-growing sports subscription streaming service in Japan. We remain very confident in the growth ahead of Spotify, and you can expect to continue to see us manage for growth over profitability as we strive to create an ecosystem of discovery and benefits for millions of artists, billions of consumers, and really, the entire music industry. And, with that, let's open the floor for questions.

Questions and Answers:

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Great. Thanks, Daniel. So, our first question comes from Matt Thornton at SunTrust.

Matthew Thornton -- SunTrust Robinson Humphrey -- Director

The commentary from the letter around accelerating investment in R&D and content in 2019 and the pressure it would cause on operating margin -- is this pressure relative to the overperformance in operating margin in 2H '18, or is this a signal the operating margin outlook has changed? Given you're still looking for positive free cash flow, we presume the operating margin would not be that different versus 1H '18 run rate.

Barry McCarthy -- Chief Financial Officer

Let me begin with an answer and then see if Daniel wants to supplement. So, we saw increased operating margins in the current quarter more than we were anticipating because we weren't able to deploy investments in R&D as rapidly as we had hoped, which means that the pace of product innovation is slower than we anticipated, and we meant to signal our intent to reverse course and accelerate the pace of investment, which will pressure operating margins more than they are currently being pressured by the rate of R&D investment, which is what we were trying to signal.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Great. Our next question comes from Ben Swinburne of Morgan Stanley.

Ben Swinburne -- Morgan Stanley -- Managing Director

You recently revamped the premium app (I am a fan, some are not). Can you talk about what, in your view, were the key changes, the strategic objective, and if there has been any impact on engagement, trends, or churn?

Daniel Ek -- Chief Executive Officer

Well, let's really take two steps back. We continue to make updates to our products and the user experience, both of our free tier and our premium tier. Historically, what has happened is those updates are shipped every couple of weeks or so with new changes. What we continue to do is we continue to look at ways where we can streamline the user experience and make it more easy to use and more beneficial to users, and this is one of those changes that we had shipped prior with very good results to our free users, and we're now consolidating the code base by also putting the same functionality to our premium subscribers as well. But, all in all, this is something that we had tested for months before, and we're seeing really good results.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Great. Our next question comes from Mark Kelley at Instinet.

Mark Kelley -- Instinet -- Executive Director

Can you please talk about the hiring constraints you mentioned in the letter? Are there certain skill sets or particular geographies where this is particularly pronounced?

Daniel Ek -- Chief Executive Officer

Well, I think overall, it's not a big surprise to know that in particular, when you look at engineering, machine learning, big-scale engineering, those are all skills that are widely demanded in the marketplace. And for us, it's not really about volume, it's about finding the right quality, and that's not something that's different to Spotify than really any other technology company in the world. And we're certainly looking at that, scaling up both in Europe and in the U.S., and we'll continue to make improvements to how we hire and on-board and activate our workforce.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question comes from Rich Greenfield at BTIG.

Rich Greenfield -- BTIG Research -- Managing Director

In your release, you state that advertising margins will benefit from the shift to self-serve programmatic. Over what time frame should we think about the shift occurring from the direct-sales-focused model you have today?

Barry McCarthy -- Chief Financial Officer

"Many years" is the short answer. Programmatic -- automated solutions account for between 20-24% of revenues currently, and are growing at almost twice the rate of direct. We recently launched a new automated feature. It's still quite early; it's growing extremely fast, but off of a very small base. Second, the market is moving aggressively toward programmatic solutions, and faster in Europe than they are in the U.S. -- U.K. in particular. So, we've made it a point of technical emphasis from a product development standpoint, and it's important that we be successful in order to find the operating leverage that the business requires long-term in order to generate attractive financial returns. So, the market is heading there, and we're driving there as fast as we can.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Our next question comes from Justin Patterson at Raymond James.

Justin Patterson -- Raymond James -- Analyst

Spotify for Artists beta features: Please talk about music uploading and playlist submission. Are there any early learnings on how that's helping artists promote their music better? Additionally, could you explain how these features could benefit labels over time?

Daniel Ek -- Chief Executive Officer

Yeah. Again, we're very encouraged with the early results of this beta test in the U.S. And so far, we've now seen on the new music submission more than 67,000 artists that have submitted their works through that product and over 10,000 new artists that have been added to editorial playlists for the very first time, connecting their music with thousands of new fans. So we're very encouraged by the early results of this.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question comes from Heath Terry of Goldman Sachs.

Heath Terry -- Goldman Sachs -- Managing Director

With the reduction at the top end of your guidance and the increase in operating profit expectations, is there a reason that incremental profit isn't being used to drive subscriber growth? Does this say something about the incremental costs of subscriber additions? What are you seeing in the cost of acquiring customers?

Barry McCarthy -- Chief Financial Officer

If you think back to our commentary during Investor Day, I made two important points. One is, profit margin is a managed outcome. It's a by-product of the pace we choose to invest in new features and functionality to drive growth. Second point is the three ways to invest in growth -- one is marketing; two is geographic expansion, which we're pursuing aggressively; and three is investment in features and functionality that drive a better user experience, which drives more engagement, which drives more customer CAC, which drives more word of mouth and organic growth, improves LTV, and importantly, improves LTV/CAC ratio.

So, the third point I'd make is -- for those who aren't familiar with the company -- it's an engineering-driven org, very product-focused, and so, the incremental investments are all about building features and functionality that make for a better user experience. And the point is to accelerate the growth of the business as a concept lens. It's a consequence of those product investments, and it's a consequence of the investments we're making in geographic expansion.

So, in terms of the commentary in the letter, because you could see the expanding -- the margins expanding faster than we had forecast they would -- we were concerned that your expectations would get ahead of ours in terms of the future trend line, so we added some cautionary language. We've given you an incomplete picture of the future, and not yet commented on 2019 and any benefits that might result from the investments we're making. So, I appreciate your patience. That will come on the next call.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question comes from Mark Mahaney at RBC.

Mark Mahaney -- RBC Capital Markets -- Analyst

Can you talk about the progress of Spotify's integration with Samsung devices? Does this appear to be leading to a meaningful adoption of Spotify and a ramp to premium subs?

Daniel Ek -- Chief Executive Officer

Again, it's a very recent announcement that we made with Samsung. It's a multiyear partnership and it's something that we're actively rolling out as we speak, so I think it's too early to talk about the progress. That said, taking a step back, I think when you look at the landscape, we are an independent player in this, and one of our key strategies is to partner with as many players as we possibly can. And by being an independent player in all of this, that opens up for that strategy where we can be on every device, which we know that our customers really enjoy. Because the truth of the matter today is that there's a lot of customers out there that have devices of many of these ecosystems, whether it be Amazon, Google, or Apple ecosystems, and Spotify's goal is to be a top-notch user experience on all of those devices.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question comes from John Egbert at Stifel.

John Egbert -- Stifel Nicolaus -- Analyst

How should we think about podcasts and how significantly you're investing in that format? What are some of the challenges you face in building out the content for podcasts, and how do you approach negotiations with content owners? Is there an opportunity to strike fixed-cost deals or more advantageous variable licensing agreements for podcasts relative to music content?

Daniel Ek -- Chief Executive Officer

I think we're still in the very much early days of how the whole podcast marketplace will evolve. So, right now, we're experimenting with different deal types, both fixed and variable. But I think over time, the way we are looking at this is that this is an integral component. When you look at the landscape overall and you think about something like radio, the truth is that the vast majority of the minutes that are being spent on radio today haven't yet moved online. So, our opportunity really is gigantic when you look at that, and there aren't too many companies in the world that are focused on that opportunity of bringing audio online. And as part of that, obviously, we think nonmusic content has a very important place, and we're really investing in both improving the user experience around that, but also improving monetization for creators in that space.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question comes from Ross Sandler at Barclays.

Ross Sandler -- Barclays Bank -- Managing Director

What pace of ARPU decline do you expect to see in 2019 compared to the current decline, and how is it impacting international mix, family plan, and FX? What are the biggest drivers?

Barry McCarthy -- Chief Financial Officer

The biggest driver will be growth in Student and Family plan, bigger than geographic expansion, and the rate of decline will continue to decelerate, and I think that's all we're going to say about ARPU at the moment.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question comes from Michael Morris from Guggenheim.

Michael Morris -- Guggenheim Securities -- Analyst

Can you provide more detail on the Google Home partnership? How is it accounted for and how does it impact margin? Will Spotify be in some way prioritized as a streaming service for users relative to Google's YouTube Music?

Daniel Ek -- Chief Executive Officer

Well, let's talk about the user experience first and foremost. It's a great partnership that we have with Google. On the devices that are shipped to customers, Spotify definitely is an integral part in pre-installed on that experience. So, we're very excited about it, and I'll let Barry comment on the financial impact.

Barry McCarthy -- Chief Financial Officer

I actually appreciate the opportunity to comment -- no comment.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question comes from Doug Anmuth at J.P. Morgan.

Douglas Anmuth -- J.P. Morgan -- Managing Director

Can you talk about the new ad-supported user interface and the added functionality you rolled out in the ad-supported version earlier this year? Is it already having a positive impact on engagement and retention, and what are you seeing in conversion rates to premium subs?

Daniel Ek -- Chief Executive Officer

I think it's really too early yet to say. The early signs are encouraging, but there's still lots of noise in the data. The noise in the data mostly relates to the fact that this is being rolled out in many different geographies with slightly different user characteristics depending on where you are in the world. But so far, the early test result that we did prior to launching this seems consistent with the results that we're seeing out in the wild.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question comes from Eric Sheridan at UBS.

Eric Sheridan -- UBS Investment Bank -- Managing Director

How should we think about the e-commerce opportunity -- ticketing, merchandising, et cetera -- on the platform in the coming years? What are some of the friction points with product partners, et cetera, that Spotify needs to solve to achieve their goals?

Daniel Ek -- Chief Executive Officer

I think if we up-level this and not talk about the specifics of merchandising and ticketing, and instead talk about the fact that at Spotify, our goal is to connect artists and fans, and as part of that, for many artists, they have a huge audience on Spotify, and we have a better ability -- we believe -- over time to discern who are real fans versus not. As part of that, you could expect us to enable opportunities as part of our marketplace strategy to create more opportunities for creators to up-sell those superfans various products.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question comes from Jessica Reif from Bank of America.

Jessica Reif -- Bank of America Merrill Lynch -- Managing Director

Can you talk about traction in some of your newer, larger markets like Japan? When do you expect to launch in India, and what are the main challenges in launching?

Daniel Ek -- Chief Executive Officer

Well, we don't break out performance on any specific market, but so far, the results in Japan have been encouraging. We keep on investing in that market and believe over time that it will be a very significant market to us. As it relates to market launches, there's a number of different factors that we look at both that we evaluate launching new markets, but then, coupled with, of course, the industry. India specifically is a very fragmented marketplace, with lots of different local labels, lots of different local publishers. Whenever we deal with licensing situations, it's very hard for us to predict accurate timelines on the basis of multiple partnerships -- just the sheer scale of number of partnerships makes it very hard to predict that. But there's nothing that we see that prevents us from launching in India.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question from Nick Delfas at Redburn.

Nicholas Delfas -- Redburn Partners-Analyst

Do you have any plans to charge artists for data or for promoting work on the paid service in any way?

Daniel Ek -- Chief Executive Officer

Our strategy in our marketplace side of the business is the same as we have on the rest of Spotify. Which is it's a freemium business, meaning there will be a certain amount of products which artists and labels can get for free, and there are others which we will charge money for. So, that's an evolving strategy when it comes to our product portfolio. Data specifically is very unlikely to be one of those things that we'll charge for.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question from Lloyd Walmsley at Deutsche Bank.

Lloyd Walmsley -- Deutsche Bank -- Analyst

Should we expect the path for gross margin improvement toward your long-term targets to be fairly linear, or should we expect it to be a bit volatile, where some years' gains are more substantial than in other years? How should we think about the path for the near term?

Daniel Ek -- Chief Executive Officer

I certainly would expect -- and, we've said this before -- that the gross margin, the vast majority of all the gross margin improvements will come from our marketplace strategy. So, as we look at the marketplace strategy over time, it is not a function of what previously used to happen, which was one or two negotiated deals, but instead, more likely lots and lots of deals that will happen on individuals, as artists and labels are purchasing more services.

Barry McCarthy -- Chief Financial Officer

And, I would add that if, over time, let's say podcasts become a significant component of the business, that will have its own margin structure separate from music biz and a revenue stream different from the music biz. Today, we observe advertisements on subscription as well as ad-supported businesses, and we expect that to also be true on our platform as well. And, that business will grow gradually over time, and the effects of that margin structure will grow gradually over time.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question comes from Maria Ripps at Canaccord.

Maria Ripps -- Canaccord Genuity -- Analyst

With the Music Modernization Act signed into law last month, what are the incremental costs for Spotify? Is there an impact on our licensing fees? Could you give us some color on any incremental costs related to creating and retaining your licensing database?

Barry McCarthy -- Chief Financial Officer

We mostly think there's goodness for us in the passage of the act. It makes it easier for us to know who the rights holders are and how to pay them. So, I think of it over the long term as a margin-enhancing opportunity, not a cost.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question from Amy Yong at Macquarie.

Amy Yong -- Macquarie Capital -- Associate Director

Can you help us through some of the major factors in your current label negotiations? What's different this time around? Are the labels looking for more data?

Daniel Ek -- Chief Executive Officer

I can't comment on the specifics of any ongoing negotiation with any party. But what I can say is that the primary focus for us is our strategy, which is around the two-sided marketplace, and that's what we're working with all of our partners on.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question comes from Alan Gould at Loop Capital.

Alan Gould -- Loop Capital -- Analyst

How does the competitive landscape change with Sirius planning to acquire Pandora and Apple potentially striking a deal with iHeart Media?

Daniel Ek -- Chief Executive Officer

Again, if we take two steps back and look at the landscape and the earlier commentary I made, we believe that the vast majority of minutes that are on radio today haven't yet moved online. It's quite natural that we're not going to be the only player that wants to get those minutes as it comes online. But we feel really good about our strategy, which is ubiquity, personalization, and a superior user experience, and that's what we're continuing to invest in.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question from Thomas Singlehurst at Citi.

Thomas Singlehurst -- Citi Investment Research -- Managing Director

There's been some speculation you might be a potential buyer of a stake in UMG now that the asset is formally up for sale. Can you talk about the pros and cons of potentially being an owner of a recorded music business and all that might entail?

Daniel Ek -- Chief Executive Officer

I really can't make any comments on any deal negotiations at this point.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question from Matt Harrigan at Buckingham.

Matthew Harrigan -- Buckingham Research -- Director

Given the higher-than-anticipated growth in smart speakers relative to expectations a year ago and with about 30% of new smart-speaker users taking a streaming service, do you feel that you did a more accurate job of incorporating this into your projections than outside analysts? Otherwise, you presumably would have beat subscriber numbers unless there were shortfalls in other areas, or are smart speakers vastly less important than Student and Family plans? Thanks.

Daniel Ek -- Chief Executive Officer

Well, from what we're seeing in our data, it's definitely a rising segment, and it's a very fast-growing segment for us. But that said, as the scale goes, all of our other product lines are vastly larger.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Next question from Barton Crockett at B. Riley.

Barton Crockett -- B. Riley FBR -- Managing Director

Can you give us a sense of the size of the least expense that will be eliminated from the transition to the new accounting standard next year and the size of the least obligations that will move onto the balance sheet?

Barry McCarthy -- Chief Financial Officer

The contingent liability footnote will give you a sense of the size of the obligations that will move onto the balance sheet. We're not anticipating a reduction of expense. It just gets carved up into different categories -- depreciation and interest expense.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

A follow-up question from Heath Terry at Goldman.

Heath Terry -- Goldman Sachs -- Managing Director

There seems to be a disconnect between the way the press reports your ambitions for direct distribution relationships with artists and the way you talk about those plans. Can you clarify what you've done to date in direct distribution relationships or direct music content acquisition and what your strategy is for leveraging direct distribution or licensing relationships in music?

Daniel Ek -- Chief Executive Officer

Again, to take two steps back, I made some commentary around this on the last earnings call as well, but we don't view our strategy to be in opposition of any of our partners. In fact, we view the strategy really to be enhancing to our partners as well. So, if you think about it from the standpoint of the investment that labels, publishers, and everyone else makes in the ecosystem today, it's quite substantial in order to bring a new artist to the masses. So, there's an enormous amount of marketing and promotion cost associated with that.

One way you should view our marketplace strategy is that we want to make that a lot more efficient. And if we can bring down the cost for that, we should see a lot more artists being successful and we should see a lot more labels be successful in the marketplace as well. We don't view this as "Spotify has to win, labels lose," but instead as a win-win. I think that's the fundamental difference. And then, obviously, the point being also is I think everyone looks at what has previously happened in the industry and looked at Netflix being the prime example here. But as I've said many times before -- also publicly -- Netflix on the surface is a very similar business to ours, but underneath that surface, it's very different in the case of our marketplace strategy and their original content strategy.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

We have a follow-up question from Rich Greenfield at BTIG.

Rich Greenfield -- BTIG Research -- Managing Director

In the U.S., Spotify's podcast market share appears to be high single digits. However, overseas, you are the dominant player in many markets. How do you close the U.S. gap?

Daniel Ek -- Chief Executive Officer

Well, we're continuing to invest in our user experience and are continuously shipping new updates to our products -- among them, things that you should expect of a great podcast player like the ability to fast-forward, the ability to speed up the contents, and discovery, of course, being the prime among them. We believe that there's still an enormous amount of potential in improving the user experience, and as we do that, we have a great opportunity of growing our share in podcast.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

And, this will be our last question. We're coming up on a half an hour. The question is from Greyson Clymer from Melvin Capital.

Greyson Clymer -- Melvin Capital -- Partner

Can you provide some clarity on why Q4 subscriber growth was lower at the top end versus prior expectations? Any clarity on gross ads, net ads, or churn trajectory would be helpful.

Barry McCarthy -- Chief Financial Officer

We basically just reverted back to guidance we had previously. If we'd left it alone, there would have been no change. So, my observation was the street was starting to run to the high end of the range of our guidance. And our objective is to land at about the 70th percentile range of the guidance we give, so I wanted to avoid us being in a situation where we'd exceeded our own performance expectations, but we had underperformed the street's expectations in Q4.

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Great. And, with that, we'll close the call. If anyone has any follow-up questions, please email the IR inbox at [email protected], and we look forward to speaking with you guys next quarter. Thanks, everyone.

Operator

This concludes today's conference call. You may now disconnect.

Duration: 30 minutes

Call participants:

Paul Vogel -- Head of Investor Relations and Financial Planning & Analysis

Daniel Ek -- Chief Executive Officer

Barry McCarthy -- Chief Financial Officer

Matthew Thornton -- SunTrust Robinson Humphrey -- Director

Ben Swinburne -- Morgan Stanley -- Managing Director

Mark Kelley -- Instinet -- Executive Director

Rich Greenfield -- BTIG Research -- Managing Director

Justin Patterson -- Raymond James -- Analyst

Heath Terry -- Goldman Sachs -- Managing Director

Mark Mahaney -- RBC Capital Markets -- Analyst

John Egbert -- Stifel Nicolaus -- Analyst

Ross Sandler -- Barclays Bank -- Managing Director

Michael Morris -- Guggenheim Securities -- Analyst

Douglas Anmuth -- J.P. Morgan Chase -- Managing Director

Eric Sheridan -- UBS Investment Bank -- Managing Director

Jessica Reif -- Bank of America Merrill Lynch -- Managing Director

Nicholas Delfas -- Redburn Partners-Analyst

Lloyd Walmsley -- Deutsche Bank -- Analyst

Maria Ripps -- Canaccord Genuity -- Analyst

Amy Yong -- Macquarie Capital -- Associate Director

Alan Gould -- Loop Capital -- Analyst

Thomas Singlehurst -- Citi Investment Research -- Managing Director

Matthew Harrigan -- Buckingham Research -- Director

Barton Crockett -- B. Riley FBR -- Managing Director

Greyson Clymer -- Melvin Capital -- Partner

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