Spotify CFO Paul Vogel said the company’s decision several weeks ago to initiate a reorganization including layoffs of 6% of its global workforce was a “a real positive” in terms of being willing to take a hard look at operations and “evolve.”
Today, the company is “a more efficient business,” the exec said during a virtual appearance at the Morgan Stanley Technology, Media and Telecom Conference. “Reporting lines are more streamlined, the accountability is there. The ability to get things done with fewer people is there. And when you become a business that’s as big as we’ve become, you sometimes have to make changes.”
When Vogel started at the company seven years ago, he said, it had about 1,500 workers, compared with today’s workforce of almost 10,000. The layoffs announced in January followed a 26% year-over-year increase in employees in 2022 compared with 2021, including the hiring of some 1,000 engineers.
“We’re bigger, we’re going to be more efficient,” Vogel said. “We’re going to get more done. We’ll be able to do it without having to add the same level of incremental resource as we did in the past.”
Before the Q&A period with Morgan Stanley analyst Benjamin Swinburne, Vogel kicked off the session by recapping highlights from the company’s annual Stream On event, which was held earlier Wednesday. Among the noteworthy revelations there was the company reaching 500 million monthly active users ahead of recent internal forecasts and approaching $40 billion in payments to music labels and artists. Along with a spate of programming announcements, Spotify also unveiled an extensive redesign of its app, with the primary goal of helping listeners more easily sample and discover music and podcasts.
The company has executed a flurry of M&A and talent deals in the podcast sector in recent years, acquiring The Ringer, Gimlet Media and other producers and also setting pricey deals with Joe Rogan and other personalities. That has proven to be a financial strain, but Vogel said the company continues to believe that the investments will pay dividends and hit profit targets. “We’re still super-optimistic about the business and where it can go over time,” he said. “Four years ago, we were nowhere in podcasting. Now, we’re the global leader.”
Having scaled quickly, the exec added, Spotify is now focusing on tech innovations aimed at helping creators unlock more ad potential and making for a more engaging listening experience for users. One example is auto-play, a staple of the music offering on Spotify soon to be replicated on the podcast end.
As far as the grueling macroeconomic environment, with inflation and foreign currency gyrations hurting revenue, Vogel said he had no update for investors since the company’s earnings report and investor day several weeks ago. “It was choppy coming out of Q4, it’s still been choppy into Q1,” he said.
Swinburne asked about Spotify’s competitive position versus larger tech players — specifically Apple, which stacks music and podcasting on top of TV, video games, cloud storage and a range of other services; and YouTube, which has made strides in music. “This is all we do,” Vogel said. “Our singular focus on streaming audio and giving the best possible experience to users, I think, separates us. That’s No. 1. No. 2 is, we have more engaged users. The average user spends two times on Spotify than a user on another streaming platform. What we’re seeing is that our platform and our innovation make for a better product.”
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