service for streaming music CEO Daniel Ek announced on Monday that Spotify is making a significant cost-cutting and growth-adjustment move by laying off 17% of its workers.
In an email to employees, Ek stated that Spotify was taking “major effort to rightsize our costs.” He also mentioned that between 2020 and 2021, when financing was inexpensive and tech businesses could invest large sums in team expansion, the company hired too many people.
A CNBC source with knowledge of the situation estimates that the most recent round of downsizing equals to about 1,500 jobs. The precise number of roles impacted by the move was not disclosed by a Spotify representative.
In U.S. premarket trade, Spotify shares were up almost 2% as of 4:15 a.m. ET.
“We have focused heavily on transforming Spotify into a truly great and sustainable company over the last two years, with the aim of becoming the world’s top audio company and continuing to drive profitability and growth,” Ek stated in an internal memo that was made public on Spotify’s website.
We still have work to do, even though we’ve made commendable progress, as I’ve mentioned numerous times. Both the rate of economic expansion and the cost of capital have sharply decreased. These realities apply to Spotify as well.
It follows after Spotify revealed a third-quarter profit of 65 million euros ($70.7 million), citing fewer marketing and staff costs.
Source (CNBC)
