21/264 RISK FACTORS An investment in our ordinary shares involves a high degree of risk. You should carefully read and consider the following risks, along with the other information included in this prospectus. If any of the following risks actually occurs, our business, results of operations, financial condition, and cash flow could be materially impaired. The public price of our ordinary shares could decline due to any of these risks, and you could lose all or part of your investment. Risks Related to Our Business If our efforts to attract prospective Users and to retain existing Users are not successful, our growth prospects and revenue will be adversely affected. Our ability to grow our business and generate revenue depends on retaining and expanding our total User base, increasing advertising revenue by effectively monetizing our Ad­Supported User base, and increasing the number of Premium Subscribers. We must convince prospective Users of the benefits of our Service and our existing Users of the continuing value of our Service. Our ability to attract new Users, retain existing Users, and convert Ad­Supported Users to Premium Subscribers depends in large part on our ability to continue to offer leading technologies and products, compelling content, superior functionality, and an engaging User experience. Some of our competitors, including Apple, Amazon, and Google, have developed, and are continuing to develop, devices for which their music streaming service is preloaded, which puts us at a significant competitive disadvantage. As consumer tastes and preferences change on the internet and with mobile devices and other internet­connected products, we will need to enhance and improve our existing Service, introduce new services and features, and maintain our competitive position with additional technological advances and an adaptable platform. If we fail to keep pace with technological advances or fail to offer compelling product offerings and state­of­the­art delivery platforms to meet consumer demands, our ability to grow or sustain the reach of our Service, attract and retain Users, and increase our Premium Subscribers may be adversely affected. In addition, in order to increase our advertising revenue, we also seek to increase the listening time that our Ad­Supported Users spend on our Ad­Supported Service. The more content we stream under the Ad­Supported Service, the more advertising inventory we have to sell. Further, growth in our Ad­Supported User base increases the size and scope of user pools targeted by advertisers, which improves our ability to deliver relevant advertising to those Users in a manner that maximizes our advertising customers’ return on investment and, ultimately, demonstrates the effectiveness of our advertising solutions and justifies a pricing structure that is advantageous for us. If we fail to grow our Ad­Supported User base, the amount of content streamed, and the listening time spent by our Ad­Supported Users, we may be unable to grow Ad­Supported revenue. Moreover, given that Premium Subscribers primarily are sourced from the conversion of our Ad­Supported Users to Premium Subscribers, any failure to grow our Ad­Supported User base or convert Ad­Supported Users to Premium Subscribers may negatively impact our revenue. In order to increase our Ad­Supported Users and our Premium Subscribers we will need to address a number of challenges, including: • improving our Ad­Supported Service; • providing Users with a consistently high­quality and user­friendly experience; • continuing to curate a catalog of content that consumers want to engage with on our Service; • continuing to innovate and keep pace with changes in technology and our competitors; and • maintaining and building our relationships with the makers of consumer products such as mobile devices. We may not be able to successfully overcome each challenge, which could have a material adverse effect on our business, operating results, and financial condition. 14