Daniel Ek Says Spotify Layoffs Were More Disruptive Than Anticipated — After Cashing Out $118.8 Million in Shares

Daniel Ek comments on Spotify layoffs
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Daniel Ek comments on Spotify layoffs
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Photo Credit: Magnus Höij / CC by 2.0

Spotify CEO Daniel Ek admits that recent layoffs created more of a ‘significant challenge’ for the company’s day-to-day operations than he initially anticipated.

It turns out laying off 1,500 people back in December had a bigger impact on Spotify’s day-to-day operations than CEO Daniel Ek had anticipated. Ek admitted during the company’s quarterly earnings call that the layoffs created a “significant challenge” for Spotify, but assured investors that they’ve already overcome the 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,” said Ek.

And the company’s Q1 2024 earnings reveal that might have been the right decision in terms of profit, just as Ek had hoped. On Tuesday, Spotify reported its earnings for the first quarter of 2024, revealing a profit of $210 million after having incurred losses of around $241 million in the same period last year.

Spotify let go of 2,300 workers last year overall across three rounds of layoffs. In addition to laying off 1,500 people in December, the company cut around 600 employees in January 2023, and another 200 in June.

Meanwhile, as Spotify steadies its trajectory after downsizing its headcount, the company’s stock seems to be doing a lot of changing hands as several Spotify executives have cashed out millions in shares. Ek himself cashed out $118.8 million in SPOT shares, according to a recent SEC filing. Gustav Soderstrom and Alex Norstrom also cashed out significant shares, at $15.9 and $5.6 million, respectively.

That follows a slew of earlier cash-outs in the year following Spotify’s Q4 2023 earnings report, equating around $100 million worth of Spotify stock. Like the latest bout of cash-outs, investors didn’t find them terribly alarming — even as the music publishing industry continues to turn the screws on Spotify in the face of its pivot to audiobooks.