On Tuesday, Spotify Technology S.A. (NYSE:SPOT) executives said artificial intelligence is dramatically increasing employee productivity while allowing the company to maintain a disciplined workforce strategy without major hiring growth.
Spotify Focuses On Productivity Over Workforce Expansion
During Spotify's first-quarter 2026 earnings call, co-CEO Gustav Söderström said the company is seeing substantial productivity improvements from AI adoption, with some internal performance metrics doubling.
"We’re keeping our headcount roughly flat and just doing much more, shipping more value to consumers," Söderström said, explaining that Spotify is choosing a middle-ground strategy between cutting jobs and aggressively expanding hiring.
Spotify Measures AI Gains Through Output And Product Launches
Spotify tracks productivity using multiple internal benchmarks, including software development output, completed feature launches and strategic initiatives.
The company is also beginning to see AI-driven improvements translate into consumer usage, which executives view as a strong predictor of retention and long-term revenue growth.
Spotify Maintains Strict Cost Discipline Amid AI Investments
Co-CEO Alex Norström noted that Spotify's profitability strategy has remained focused on workforce discipline since a prior restructuring.
"Some years ago, we did a resizing of the organization. And since then, as you’ve seen, we haven’t increased our employees and we have been very diligent in keeping the overall platform stable," Norström said.
He added that Spotify reduced headcount by 65 employees last quarter.
Spotify Q1 Earnings Beat As User Growth Tops Expectations
Spotify posted first-quarter earnings of $4.04 per share, surpassing Wall Street expectations of $3.72 per share. Revenue climbed 8% from a year earlier to $5.308 billion, though it came in slightly below analysts' projected $5.36 billion.
The streaming giant also delivered strong user growth, with monthly active users rising 12% year over year to 761 million. Net user additions reached 10 million during the quarter, outperforming the company's forecast of 8 million.
For the second quarter of 2026, Spotify forecast revenue of 4.80 billion euros, roughly $5.545 billion, missing analysts' expectations of $5.650 billion.
AI-Driven Layoffs Expand Across Major Companies
In March, Atlassian Corp. (NASDAQ:TEAM) said it would cut about 1,600 positions — roughly 10% of its global workforce — with CEO Mike Cannon-Brookes openly acknowledging that AI is reshaping "the number of roles required."
Earlier, Morgan Stanley (NYSE:MS), Oracle Corp. (NYSE:ORCL), Block Inc. (NYSE:XYZ) and Capital One Financial Corp. (NYSE:COF) also announced thousands of layoffs.
Meta Platforms Inc. (NASDAQ:META) is reportedly preparing to begin its first major wave of layoffs on May 20, with plans to eliminate approximately 8,000 jobs, representing about 10% of its global workforce.
The March jobs report provided some relief, showing 178,000 new jobs added, significantly above economists' expectations of 60,000.
Price Action: Spotify shares closed Tuesday at $434.20, down 12.43%. The stock slipped an additional 0.16% in after-hours trading to $433.50, according to Benzinga Pro.
According to Benzinga Edge data, Spotify ranks in the 97th percentile for growth, though its stock is showing a negative price trend across short, medium and long-term performance trends.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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