Spotify (SPOT) announced late Thursday that its CFO Paul Vogel will step down from his position after eight years 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 his position on March 31, 2024. This news comes just days after the company confirmed its third round of layoffs this year.
"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," Spotify CEO Daniel Ek said in a release announcing Vogel's departure.
In Thursday's announcement Ek reiterated the company remains on track to hit the financial targets laid out at its Investor Day.
"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 experience."
The company said it has launched an external search for a successor and that Ben Kung, vice president of financial planning and analysis, will take on an expanded role to support the finance team's realignment in the interim.
Spotify stock was little changed on Friday. Shares are up about 150% year to date after losing two-thirds of their value in 2022. The stock is currently trading at its highest level since January 2022, but remains about 30% below its record close of $364.59 in February 2021.
Spotify revealed plans on Monday to lay off 17% of its workforce, or about 1,500 employees. The company laid off about 600 employees in January and another 200 workers in June.
Ek said Monday's cuts came despite the streamer's recent efforts to boost margins, with the executive citing economic growth that has "slowed dramatically" as higher interest rates squeeze profits amid increased capital expenses.
Spotify's profitability push
In the third quarter, Spotify turned a profit for the first time in over a year, as its recent price hikes coupled with lower-than-expected costs related to personnel and marketing spend boosted its bottom line.
Overall, analysts have been bullish on Spotify after the audio giant pledged to improve its profitability beginning in 2023 on a gross margin and operating income basis.
"[Spotify's] recent surprising third quarter profitability underscores how much operating leverage the platform possesses after cutting 2% and 6% of staff in two recent rounds of layoffs," Macquarie analyst Tim Nollen wrote in a note to clients following Monday's layoff announcement.
Nollen, who raised his price target to $232 a share from $210 and reiterated his Outperform rating, boosted his 2024 operating income estimate to €482 million, up from the prior €212 million. He also increased his full-year 2025 estimate to €916 million from €501 million.
Spotify spent $1 billion pushing into the podcast market over the past four years with splashy A-list deals and $400 million-plus studio acquisitions.
That spending took a significant bite out of gross margins and weighed heavily on profitability. In addition to price hikes and layoffs, Spotify realigned its podcast division this year and recently made audiobooks free to paying subscribers.
Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal, LinkedIn, and email her at [email protected].
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