Music streaming giant is the latest tech company to announce mass layoffs.
The company has announced it will be cutting 6 per cent of its workforce – around 600 jobs.
It’s the latest in a series of firings from tech giants including Amazon, Meta and Microsoft.
Spotify says it is going through a reorganisation that will also see chief content and advertising business officer Dawn Ostroff leave the business.
Spotify, which had about 9,800 full-time employees as of last September said it expects to incur about 35 million euros to 45 million euros (£31 – £40m) in severance-related charges.
However, shares in the company have rose 3.5 per cent in premarket trading.
‘Over the next several hours, one-on-one conversations will take place with all impacted employees. And while I believe this decision is right for Spotify, I understand that with our historic focus on growth, many of you will view this as a shift in our culture,’ said CEO Daniel Ek today, Monday, 23rd January.
‘But as we evolve and grow as a business, so must our way of working while still staying true to our core values.
‘To offer some perspective on why we are making this decision, in 2022, the growth of Spotify’s OPEX outpaced our revenue growth by 2X. That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap.
He continued: ‘As you are well aware, over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough. So while it is clear this path is the right one for Spotify, it doesn’t make it any easier—especially as we think about the many contributions these colleagues have made.’
Spotify’s move comes at a time when tech companies are facing a demand downturn after two years of pandemic-driven growth.
Like others, Spotify hired aggressively to meet the demand and is now trying to cut back to meet shareholder expectations.
The Sweden-based company has also seen advertisers pull back on spending, mirroring a trend seen at both Meta and Google’s parent Alphabet. This comes as rapid interest rate hikes and the fallout from the Russia-Ukraine war pressure the global economy.
Back in October, Spotify had said it would slow down hiring for the rest of the year and into 2023. This wasn’t enough to stop its share price more than halving during the course of last year.