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Spotify plans to cut about 17% of its staff, according to CEO Daniel Ek.
The steep cuts come as a surprise, given Spotify’s most recent quarterly earnings report.
It marked the first time the company turned a quarterly profit since 2021.
Throughout 2023, Spotify has implemented workforce reductions in an effort to optimize its operations and navigate economic challenges.
Ek announced the news in a letter to staff on Monday. The executive said, despite the streamer’s recent efforts to boost margins, economic growth has “slowed dramatically.”
The cuts will affect 1,500 people across the world
According to ABC News, in January 2023, Spotify announced a significant layoff, affecting approximately 6% of its global workforce. With today’s news, the entertainment titan is undeniably facing financial burdens that will directly affect their best and brightest.
This decision was primarily driven by a slowdown in advertising revenue. This has been a common trend across the tech industry. The company acknowledged that rapid hiring during the pandemic had outpaced revenue growth, necessitating adjustments to align expenses with income.
Spotify cuts deep
In June 2023, Spotify undertook a second round of job cuts, specifically targeting its podcasting unit.
According to Axios, approximately 200 employees were impacted, representing around 2% of the company’s total workforce. This decision reflected a strategic shift within the podcasting division, emphasizing growth in original content rather than acquisitions.
“The Spotify of tomorrow must be defined by being relentlessly resourceful in the ways we operate, innovate, and tackle problems,” Ek continued. “This kind of resourcefulness transcends the basic definition – it’s about preparing for our next phase, where being lean is not just an option but a necessity.”
The company laid off about 800 workers between January – June
According to an SEC filing, the company estimates that it will incur approximately $130 million to $145 million in charges in the current quarter, primarily consisting of severance-related pay and the impairment of real estate assets as a part of the staff reduction.
“The Spotify of tomorrow must be defined by being relentlessly resourceful in the ways we operate, innovate, and tackle problems,” Ek continued.
Spotify to prepare for “next phase”
“This kind of resourcefulness transcends the basic definition – it’s about preparing for our next phase, where being lean is not just an option but a necessity.”
According to an SEC filing, the company estimates that it will incur approximately €130 million to €145 million in charges in the current quarter, primarily consisting of severance-related pay and the impairment of real estate assets as a part of the staff reduction.