Examining the Road Ahead for Spotify (SPOT) After CFO Departure and Sell-Off

Examining the Road Ahead for Spotify (SPOT) After CFO Departure and Sell-Off

Posted On December 19, 2023 9:47 am

Spotify Technology S.A. (SPOT) recently announced that its CFO, Paul Vogel, will step down from his position after eight years of service at the music streaming giant. Vogel, who joined Spotify in 2016 as head of investor relations before taking over the CFO role in 2020, will exit on March 31, 2024. This news came just days after the company announced its third round of layoffs for 2023.

“Spotify has embarked on an evolution over the last two years to bring our spending more in line with market expectations while also funding the significant growth opportunities we continue to identify. I’ve talked a lot with Paul about the need to balance these two objectives carefully. Over time, we’ve come to the conclusion that Spotify is entering a new phase and needs a CFO with a different mix of experiences,” SPOT’s CEO Daniel Ek said in a release announcing Vogel’s exit.

In the announcement, Ek reiterated that the company remains on track to deliver against the targets outlined on its Investor Day.

The music streaming company launched an external search for Vogel’s successor. Ben Kung, vice president of financial planning and analysis, will take on expanded responsibilities to support the company’s financial leadership team’s realignment in the interim.

Organizational Changes

Earlier this month, SPOT announced laying off 17% of its workforce, aiming to lower its costs while focusing on its profitability.

In an email sent to employees posted on the company’s blog, Spotify’s CEO said that the job cuts are part of a “strategic reorientation.” The post didn’t specify the exact number of roles affected by the measure, but a spokesperson confirmed that it amounts to nearly 1,500 people.

The company added that it had used cheap financing to expand the business and “invested significantly” in employees, content, and marketing over the years 2020 and 2021. However, Ek indicated that Spotify got caught out as central banks began hiking interest rates last year, leading to slow economic growth. The music streaming service had to “rightsize” its costs for a new economic reality.

“Over the last two years, we’ve put significant emphasis on building Spotify into a truly great and sustainable business – one designed to achieve our goal of being the world’s leading audio company and one that will consistently drive profitability and growth into the future,” Ek said in an internal memo shared on SPOT’s website.

“While we’ve made worthy strides, as I’ve shared many times, we still have work to do. Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.”

Stockholm-based music streaming giant reported a loss of €462 million ($499.21 million) for the first nine months ended September 2023.

Spotify slashed 6% of its workforce, or about 600 employees, at the beginning of 2023. Then, in June, the company cut staff by another 2%, roughly 200 roles, primarily in its podcast division.

Shortly after the latest round of layoffs was announced on December 4, SPOT’s stock surged

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