STOCKHOLM: Music streaming giant Spotify said on Monday it would reduce its number of employees by around 17 percent in a bid to cut costs amid “dramatically” slower economic growth.
The announcement comes on the heels of a rare quarterly net profit of 65 million euros in October, compared to a loss of 166 million for the same period a year earlier, and following 26 percent growth in active users for the third quarter to 574 million.
Around 1,500 people will leave the company, Spotify said. It was the latest in a series of layoffs announced in the tech industry which is cutting tens of thousands of jobs following a boom during Covid pandemic lockdowns.
“I realise that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” chief executive Daniel Ek wrote in a letter to employees, which was seen by AFP.
He said that in 2020 and 2021, the Swedish company “took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing and new verticals.”
Ek said the company now finds itself in a very different environment, noting that “economic growth has slowed dramatically and capital has become more expensive.” “Despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big,” he added.