Spotify announces Q1 earnings following a year of significant layoffs, activist attention

Spotify reported a record Q1 earnings and beat estimates on the top and bottom lines after a year of deep cost cutting and streamlining. The company’s earnings per share were 97 euro cents ($1.04), revenue was 3.64 billion euros, and monthly active users (MAUs) were 615 million compared to 618 million estimated by StreetAccount. Spotify shares jumped more than 10% on the news, and the company also beat guidance on quarterly gross margin.

Spotify went into cost-cutting mode last year, laying off over a quarter of its headcount. The company resigned a deal with controversial podcaster Joe Rogan earlier this year but pared back its ambitions in the podcast business. Spotify issued guidance for the upcoming quarter, expecting net new MAUs of 16 million, for a total of 631 million monthly active users. It also guided to an improved gross margin of 28.1%, driven by cost improvements.

Many of the changes the company made in the last 12 months came after activist investor ValueAct took a stake in the company in February 2023 and publicly called for spending rationalization. Spotify laid off 17% of its staff by the end of the year. The company’s business itself showed growth, with MAUs increasing 19% year over year and 2% compared with the prior quarter. However, the company missed its MAU guidance by 3 million users.