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Spotify CEO Daniel Ek acknowledged Tuesday that the audio streaming giant’s job cuts in December affected the company’s first-quarter production.
Ek described the job cuts during Spotify’s earnings call as a “significant challenge” facing the Sweden-based company.
“While there is no question that this was the right strategic decision, it has disrupted our day-to-day operations more than we expected,” he said.
Spotify CEO Daniel Ek speaks at a press event in New York on May 20, 2015. Spotify, which offers free on-demand music and ad-free songs to paying customers, has announced that it will now also offer video content and podcasts. (Reuters/Shannon Stapleton/Reuters Photo)
Spotify’s December layoffs affected approximately 1,500 employees, or 17% of the company’s total workforce.
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Ek told employees in December that the layoffs were aimed at “aligning Spotify with our future goals and ensuring we can right-size and respond to future challenges.” He also said at the time that despite other efforts to reduce costs, the company’s cost structure “remains too large for where we want to be.”
FOX Business previously reported that the company cut approximately 800 jobs in two rounds of layoffs in January and June 2023.
Ek acknowledged on Tuesday that it “took a while to find our footing” after the latest round of layoffs, “but more than four months into this transition, I think we’re back on track.”
Spotify previously cut approximately 800 jobs in two rounds of layoffs in January and June 2023. (Reuters/Dado Ruvic/Illustration/File Photo/Reuters Photo)
“We expect to continue to improve our execution throughout the year and get to an even better position than we have been,” he told analysts and investors.
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Spotify previously issued guidance expecting total monthly active users to be 618 million in the first quarter. This number totaled 615 million MAU.
Overall, Spotify “had a solid quarter driven by strong revenue growth, gross margin expansion, and record operating profit,” Ek said.
| ticker | safety | last | change | change % |
|---|---|---|---|---|
| spot | Spotify Technology SA | 284.57 | -18.91 | -6.23% |
In addition to the layoffs, Ek cited 2023 MAU growth as a factor in the company’s failure to meet its first-quarter MAU growth target.
The photo shows the streaming service logo Spotify next to the smartphone’s earbuds. (Photo illustration: Rafael Henrique/SOPA Images/LightRocket, Getty Images) (Photo illustration by Rafael Henrique/SOPA Images/LightRocket via Getty Images / Getty Images)
“The MAU and subscription growth we achieved in 2023 not only exceeded our most ambitious predictions, but also set a record for the most significant user growth in Spotify history,” he said. “While we expect continued strong growth, 2023 is a truly outstanding year and we should not base our expectations on each subsequent year.”
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Spotify also “probably reduced its marketing spending too much” in 2023, but Ek said the audio streaming giant “already corrected” in the second quarter.
The company had expected second-quarter sales of 3.8 billion euros (about $4 billion) and operating profit of 250 million euros (about $267 million).
