Spotify is planning to reduce its workforce by 1,500 employees.
Spotify has announced its intention to reduce its global workforce by 17%, resulting in approximately 1,500 employees being laid off. This comes after the company already laid off 600 employees in January and an additional 200 in June.
Spotify’s CEO Daniel Ek stated that the company is persistently striving to reduce expenses and move towards profitability in a prepared statement.
According to him, our productivity has improved but our efficiency has decreased according to various measures. We must strive for both.
After experiencing a rare quarterly net profit of approximately $70.3 million in October, the company is now undergoing layoffs. It has never achieved a net profit for a full year.
“I am aware that for many individuals, a decrease of this magnitude may seem unexpectedly significant, especially after our recent earnings report and performance,” stated Ek. “We discussed implementing smaller cuts over the course of 2024 and 2025. However, given the difference between our financial target and our current operating expenses, I determined that taking substantial measures to adjust our costs was the most effective way to achieve our goals.”
Due to the recent job cuts, the company’s fourth quarter forecast has changed from a $40 million gain to a loss of $100 million to $117 million.
Most of the expenses will be allocated for compensating employees who have been let go. They will receive five months’ worth of salary, vacation pay, and health insurance during the severance period.
Spotify did not specify the exact time when the layoffs would result in financial benefits, but they did mention that these actions would bring about significant improvements in their operations going forward.
Spotify, along with other tech companies, is attempting to reduce expenses due to a slowdown in industry growth following a spike during the COVID-19 pandemic.
Major technology companies such as Meta, Microsoft, Amazon, and Google’s parent company Alphabet have publicly announced their intentions to downsize by at least 10,000 employees in the upcoming year.
On Monday, Spotify started notifying employees who were impacted by the situation.
The report contains information from Reuters, The Associated Press, and Agence France-Presse.