"We've talked about 2024 as the year of monetization and we're delivering on that ambition," said Spotify co-founder and CEO Daniel Ek in an earnings call on April 23.
Shareholders rejoiced at the company's financial success in Q1. Spotify gained an unexpected number of paid subscribers in the three month period, a 14% year-on-year increase. Revenue increased by 20%.
The streaming platform's stock (SPOT) jumped up nearly 15% on Tuesday to a value of roughly $312 before sliding back to $281 on Wednesday afternoon.
Spotify is in the midst of raising the prices of its paid subscription plans. By the end of April, five non-U.S. markets will see new price tags for their subscriptions. The price of an individual subscription will rise by one dollar, and Duo and Family subscriptions will increase by two dollars more than their current rates. The streaming giant also raised its prices in 2023.
These price changes are a part of the company's move towards audiobooks. Listeners can now pay for an Audiobook Access subscription for $9.99 per month. The service allows users to listen to 15 hours of audiobooks each month.
Subscription prices aren't the only thing shifting the tides at Spotify.
The company laid off 1,500 employees, or 17% of its workforce, in December. This substantial round of layoffs brought the company's total 2023 layoffs to a staggering 2,300 employees.
Ek announced the layoffs in a post on the company's website, writing: "Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities."
He detailed that he made the "difficult decision" in order to "align Spotify with our future goals and ensure we are right-sized for the challenges ahead." He cited the need to close the gap between Spotify's financial goal state and its current operational costs.
"To be blunt, many smart, talented and hard-working people will be departing us," he continued.
Now, the company is facing the repercussions of a reduced staff.
In December, Ek said that "A reduction of this size will make it necessary to change the way we work," when he announced the layoffs. Despite the company reaching record quarterly profits in Q 2024, Spotify still failed to reach its expectations on profitability and monthly active user growth.
"Although there's no question that it was the right strategic decision, it did disrupt our day-to-day operations more than we anticipated," said Elk of the changes in Tuesday's earnings call. He reported that the company took "some time to find our footing" following the massive reduction.
The company is reportedly shifting to "focus on strong revenue growth and margin expansion."
Ek remains hopeful about Spotify's future, saying that he feels "good about the changes we are implementing and remain very confident in our ability to reach the ambitious plans we've outlined."
"I think we're back on track and I expect to continue improving on our execution throughout the year getting us to an even better place than we've ever been," he concluded.
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