Spotify’s Financial Struggles: More Layoffs on the Horizon Amid Price Increases
In a recent earnings call, Spotify’s co-founder and CEO, Daniel Ek, and CFO, Paul Vogel, hinted at the possibility of further layoffs at the world’s largest paid music-streaming service. This comes after the company’s first-ever subscriber price increases in the U.S., a move that followed similar actions by its competitors.
The company, which boasts 220 million paying subscribers, has struggled to achieve profitability. Earlier this year, Spotify reduced its workforce by 6%, followed by an additional 200 layoffs in June. The executives’ comments during the call suggest that the company may have overextended its investments during the pandemic and is now working to “rightsize” its staff.
Vogel indicated that the company’s headcount would likely decrease in the third quarter of the year, stating, “We’re continuing to be more efficient and feel really good about where we are, so you will see some of that efficiency have even more of an impact in the back half of the year with respect to the op-ex.”
The executives also noted that the impact of the company’s recent price hike on its average revenue per user (ARPU) would not be evident until the end of the third quarter, with a more substantial effect expected in the fourth quarter.
Despite the challenges, Ek remains optimistic about the company’s ability to compete in the market, even in the face of new competition from TikTok’s recently launched music-streaming service. “Competition is nothing new,” he said. “We’ve faced some formidable competitors in the past.”
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