Spotify Announces Record Profits (After Laying Off 1500 People)

Spotify announced record profits this week — less than six months after the music streaming giant announced it was laying off 1500 employees, approximately 17% of its workforce, in a drastic effort to cut costs and return the company to profitability.

The streamer reported gross profit of over 1 billion euros ($1.08 billion) on Tuesday, per Billboard. First quarter revenue rose from 3.04 billion euros ($3.3 billion) last year to 3.6 billion euros ($3.9 billion), and profits after operating expenses rose from a 156 million euro loss to a new quarterly high of 168 million euros ($180 million).

"As an adult company we are now consistently profitable, which is great news," Spotify CEO Daniel Ek said in a video posted to LinkedIn. In response, Spotify shares jumped over 14% to trade at around $312.90 on Tuesday.

But the company is still reeling from the downsizing in December, which Ek had framed as a "substantial action to rightsize our costs" that was necessary despite being "incredibly painful for our team."

"I recognize this will impact a number of individuals who have made valuable contributions," Ek said at the time. "To be blunt, many smart, talented and hard-working people will be departing us."

And despite the record profits, the company fell several million short of the 618 million monthly active users it had projected as part of its ongoing mission to expand worldwide and reach a billion users by 2030.

In a call following the first quarter earnings report, as Fortune reports, Ek told investors, "Another significant challenge was the impact of December workforce reduction. Although there’s no question that it was the right strategic decision, it did disrupt our day-to-day operations more than we anticipated."

“It took us some time to find our footing, but more than four months into this transition, I think we’re back on track and I expect to continue improving on our execution throughout the year getting us to an even better place than we’ve ever been.”

"We are going to add back some marketing spend over the year," Ek added. "Because we want to keep on having the growth and we saw that in some territories, we may have pulled back a little bit too much ... It is really a new Spotify you’re seeing, where we are being relentlessly resourceful in all of our costs."

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The recent layoffs aren't the only measure that Spotify has taken to juice its profitability in recent months.

Last year, Spotify raised the price of its premium subscription for the first time, jumping from $9.99 to $10.99 a month for individuals (and $16.99 for families) in the US, and it's reportedly considering another price hike later this year.

Spotify also announced that it will be experimenting with different subscription plans — like a basic "music-only tier for those consumers that only care about the music side" and an audiobook-only tier.