In a strategic move aimed at cost reduction, Spotify CEO Daniel Ek announced on Monday that the company will be laying off 17% of its global workforce.
The decision, disclosed in an internal memo, acknowledges the impact on individuals who have contributed significantly to the company’s success.
Ek expressed the necessity of the action, stating, “To be blunt, many smart, talented, and hard-working people will be departing us.” With over 9,000 employees worldwide, the layoffs will affect approximately 1,500 workers. Despite Spotify’s impressive growth in subscribers, boasting 220 million paying users, the company has grappled with achieving profitability.
The CEO highlighted the financial misalignment between the company’s goals and current operational costs, leading to the decision for a substantial workforce reduction. Spotify’s CFO, Paul Vogel, had hinted at the possibility of further layoffs during a July earnings call. Vogel mentioned, “Q2 was the last quarter where we had headcount higher year over year, and we expect our year over year headcount to be down in Q3 — we’ll see where that goes going forward.”
According to variety, This move follows earlier cuts made by Spotify earlier this year, which included a 6% reduction in its workforce and an additional 200 employees laid off in June. Ek acknowledged that as the company expanded, it had “moved too far away from this core principle of resourcefulness.”
The announcement underscores Spotify’s commitment to achieving financial goals through strategic measures, emphasizing efficiency in the company’s operations.
