Stockholm — Spotify announced Monday that it will cut 6% of its workforce to cut costs and join tech companies including: Amazon When microsoft Due to the global economic slowdown, we are significantly reducing our workforce.
In a letter to employees posted on the company’s website, CEO Daniel Ek took full responsibility for the job cuts, saying it was “difficult but necessary”.
“Like many other leaders, I want to maintain a strong tailwind from the pandemic and believe our low risk to the impact of a slowdown in our broader global business and advertising will isolate us. “In hindsight, I think it was our revenue growth.”
The Stockholm-headquartered music streaming business had about 9,800 employees worldwide as of September 30, according to earnings reports.
The company’s shares, which have nearly halved over the past 12 months, are up more than 4% in pre-market trading in New York. Spotify’s stock is up 24% year-to-date, according to Refinitiv data.
Over the past few months, major tech companies have quickly reversed pandemic hiring, adding thousands of workers to meet surging demand from homes and businesses for services such as online shopping and video conferencing. I was allowed to.
The same company recently cut staff significantly as inflation weighed on consumer spending and rising interest rates weighed on funding. Demand for digital services during the pandemic has also waned as people return to living offline.
In the past three months, Meta, the parent company of Amazon, Google, Microsoft and Facebook, has announced plans to cut more than 50,000 employees from its overall ranks. CNN reported.
For the most part, recent job cuts represent only a relatively small percentage of each company’s overall headcount, essentially erasing last year’s increases at some companies, leaving huge workforces.
Spotify’s decision to cut about 590 jobs is part of a broader organizational restructuring to improve efficiency and “make decisions faster,” Ek said. As part of the change, engineering and production work will be centralized. Chief Content Officer Dawn Ostroff has also decided to leave the company, Ek said.
Spotify reported a loss of $228 million ($248 million) in the most recent fiscal quarter ended September 30, with operating expenses up 65%, according to a company presentation to investors.
In 2022, operating expenses will grow at twice the rate of the company’s revenue, Ek said.
“It would have been unsustainable in the long run in any climate, but in a challenging macro environment, closing the gap will be even more difficult,” he told employees in a letter Monday. As such, we’ve made considerable efforts over the last few months to keep costs down, but it just wasn’t enough.”
Claire Duffy contributed to this report.
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