Shopify, a multinational e-commerce company, will reduce its workforce by 20%, resulting in over 2,000 layoffs. Also, Shopify…
To achieve this, the company is cutting off or reducing everything (side quests) that hinders its mission, including distractions that accumulate (shipping and logistics) as the company grows. This will allow Shopify to build the best possible product for the upcoming decade of high velocity and massive change and even leverage this new hype in the tech industry; AI.
Tobias Lütke, the CEO in the blog post issued to employees said,
For the past year we’ve been subtracting everything that’s in the way of making the best possible product. This is extremely important, because we are heading into a decade of high velocity and massive change. We will require speed, agility, and a great deal of innovation.
Read Also: Spotify surpasses 500 million monthly active users for the first time
To impacted employees
For those leaving us today, you will receive a minimum of 16 weeks severance plus a week for every year of tenure at Shopify. Medical benefits and access to our employee assistance program (EAP) will be covered through this same period. We’ll also offer outplacement services if you want them, all office furniture we provided is yours to keep. We legally need the work laptop back, but we’ll help pay for a new one to replace it. You’ll have continued free access to the advanced Shopify plan should you opt to take an entrepreneurial path in the future.
Spotify Logistics, a side quest getting acquired by Flexport
Shopify Logistics is one of Shopify’s side quests. As an e-commerce company, it took on the quest to build logistics infrastructure for e-commerce entrepreneurs, which might have seemed like a burden.
However, the e-commerce company has sold Shopify Logistics to Flexport, a freight and logistics platform, making them their preferred logistics partner. Despite Shopify’s previous investments in logistics through Deliverr and Flexport’s Series E round, the sale only granted them a 13% equity interest in Flexport, which, at its current valuation, would be worth a little over $1 billion.
But despite the layoff and the acquisition, there is still some good news. Today, shares of the e-commerce company soared 17.44% in premarket trading to $54.35.
Read Also: Spotify makes organizational changes, fires 600 employees
Spotify Q1 growth amidst challenges
Monthly recurring revenue increased by 10% to $116M. The company also reported a positive free cash flow of $86M or 6% of revenues, compared to negative free cash flow a year ago. As of the end of the quarter, Shopify had a cash position of $4.9B and a net cash position of $3.9B.
Spotify plans to focus on its mission goals after reducing its workforce and sales. They expect Q2 revenue to grow at a similar rate as Q1 on a year-over-year basis, with gross margin percentage remaining consistent.
.