Spotify to Lay Off 17% of Global Workforce
Spotify is laying off 17% of its global workforce in order to cut costs, CEO Daniel Ek said on Monday.
Ek made the announcement in an internal memo sent to staff, which the company posted on its website. “I recognize this will impact a number of individuals who have made valuable contributions,” Ek wrote in the memo. “To be blunt, many smart, talented and hard-working people will be departing us.”
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Spotify currently employs over 9,000 people globally, meaning the layoffs will eliminate around 1,500 workers. Though the music streamer has accomplished steady subscriber growth, boasting 220 million paying subscribers, it has continued to struggle to become profitable.
“Considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives,” Ek continued.
In an SEC filing, Spotify disclosed that it will incur charges of about €130 million-€145 million in the fourth quarter of 2023 for severance-related payments and other restructuring costs. Due to the charges, the company said it now expects to post a Q4 operating loss of €93 million-€108 million (versus its prior guidance of operating income of €37 million).
CFO Paul Vogel hinted that more layoffs were to come during an earnings call in July. “Q2 was 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,” he said. “We’re continuing to be more efficient and feel really good about where we are, so you will see some of that efficiency have even more of an impact in the back half of the year with respect to the op-ex.”
In January, Spotify cut 6% of its workforce, eliminating 600 jobs, then in June laid off another 200 employees in a reorg related to its podcasting business. As the company has grown, Ek concluded in the memo Monday, it has “moved too far away from this core principle of resourcefulness.”
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