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https://finance.yahoo.com/news/spotify-ceo-admits-he-got-carried-away-investing-will-rein-in-spending-this-year-143805004.html Spotify (SPOT) CEO Daniel Ek told investors on Tuesday he overspent in 2022. Speaking on the company's fourth quarter earnings call, Ek said certain mistakes were made after the company heavily invested in high-growth areas like podcasts, telling investors: "I probably got a little carried away and over-invested." Ek, who called out a shaky macroeconomic environment, emphasized the company will be tightening investments in 2023 across the board as the music streaming giant doubles down on streamlining efficiencies "with greater intensity." "Some investors don't believe we're serious about that but we're really focused on driving efficiency moving forward," Ek reiterated, noting recent layoffs and company restructuring plans were done in an effort to couple speed with efficiency. Spotify stock, which lost more than two-thirds of its value in 2022, gained as much as 9% in early trade following these results. "The next era of Spotify is one where we're adding speed plus efficiency — not just growth at all costs — that's a big shift…but now we're going to have to live up to that," Ek said. Spotify reported a wider-than-expected loss in the fourth quarter amid higher personnel costs primarily due to headcount growth, higher advertising costs, and currency movements. Operating expenses grew 44% year-over-year as a result, although the company continued to categorize 2022 as a peak investment year with significant improvements expected in 2023. Investors have remained hyper-focused on Spotify's declining gross margins, which hit 25.3% in the fourth quarter, beating expectations for 24.5%. The company said this margin improvement was "due primarily to lower investment spending and broad-based music favorability." Spotify guided a Q1 dip in gross margins to 24.9% amid "severance-related charges" after the company laid off 6% of its workforce last week. Spotify said it still expects gross margins to come in between 30% to 35% over the long term amid plans to further scale its podcasting and ad business. However, execution remains murky amid macroeconomic challenges. submitted by /u/BrainInYourButt [comments]

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