- Daniel Ek said Spotify underestimated the impact of laying off 1,500 people in December.
- “It took us some time to find our footing,” Ek told investors in an earnings call.
- The streaming giant had cut 2,300 jobs over three rounds of layoffs last year.
Laying off 1,500 people in December ended up creating a “significant challenge” for Spotify, the company’s CEO Daniel Ek said on Tuesday.
“Although there’s no question that it was the right strategic decision, it did disrupt our day-to-day operations more than we anticipated,” Ek told investors in an earnings call.
But Ek quickly assured investors that the company has managed to overcome this challenge.
“It took us some time to find our footing, but more than four months into this transition, I think we’re back on track,” Ek added.
And it seems that Ek’s decision might have paid off for Spotify.
On Tuesday, the streaming giant reported its earnings for the first quarter of 2024, where it revealed that Spotify had made a quarterly profit of 197 million euros, or $210 million. The company had incurred a loss of around $241 million in the same period last year.
Founded in 2006, the music platform has become a go-to spot for listeners hoping to enjoy the latest tunes.
On Saturday, Spotify announced that Taylor Swift’s latest album, “The Tortured Poets Department,” had become the platform’s most-streamed album in a single day. Swift herself became the “most-streamed artist in a single day in Spotify history,” the company said in an Instagram post.
“We’ve talked about 2024 as the year of monetization, and we’re delivering on that ambition,” Ek said on Tuesday.
“I feel good about the changes we are implementing and remain very confident in our ability to reach the ambitious plans we’ve outlined,” he added.
Spotify’s change in fortunes comes after the company laid off 2,300 workers over three rounds of layoffs last year. Besides cutting 1,500 jobs in December, Spotify laid off about 600 employees in January 2023 and another 200 staff in June.
The layoffs, Ek said in December, were necessary as the company needed to become “relentlessly resourceful.”
“Today, we still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact,” Ek wrote in a blog post at the time.
Ek isn’t the only tech executive who has acknowledged the difficulties and benefits of cutting jobs.
In February, Meta CEO Mark Zuckerberg told Morning Brew Daily hosts Neal Freyman and Toby Howell that laying off tens of thousands of staff was “really tough.”
“It was obviously really tough, we parted with a lot of talented people we cared about. But in some ways actually becoming leaner kind of makes the company more effective,” Zuckerberg said.
Representatives for Spotify didn’t immediately respond to a request for comment from BI sent outside regular business hours.
