Spotify (SPOT) CEO Daniel Ek has just revealed that he was surprised by the consequences of the company’s layoffs in December. During a recent earnings call discussing Spotify’s first-quarter earnings for 2024, Ek claimed that the decision to lay off 17% of the company’s workforce negatively affected day-to-day operations more than expected.

“Another significant challenge was the impact of our December workforce reduction,” said Ek during the call. “Although there's no question that it was the right strategic decision, it did disrupt our day-to-day operations more than we anticipate. It took us some time to find our footing, but more than four months into this transition, I think we're back on track.”

Spotify revealed in its first-quarter earnings report this year that its free cash flow of €207 million ($221 million) was “partially offset” by the severance payments the company had to make to employees following its December layoffs.

The company also reported that it garnered $3.63 billion in revenue during the first quarter of this year, which is a slight decrease from the $3.67 billion it brought in during the previous quarter.

When Ek sent a memo to Spotify employees in December announcing the decision to shrink the company’s workforce, he claimed that economic headwinds were the reason for the company’s layoffs.

“Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities.” wrote Ek in the memo. “This brings me to a decision that will mean a significant step change for our company. To align Spotify with our future goals and ensure we are right-sized for the challenges ahead, I have made the difficult decision to reduce our total headcount by approximately 17% across the company.”

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