Spotify to cut 1,500 jobs in latest round of layoffs
Spotify on Monday said it is cutting 17% of its staff, or roughly 1,500 people globally, in its latest round of layoffs this year.
Why it matters: The steep cuts come as a surprise, given Spotify's most recent quarterly earnings report, which marked the first time the company turned a quarterly profit since 2021.
- Spotify had previously cut 6% of its staff — roughly 600 employees — earlier this year. And it cut 200 roles after consolidating its podcast division.
- Wall Street has been critical of the company's profit margins following its heavy investments in podcasting a few years ago.
Details: In a note to staff, CEO Daniel Ek said the company was taking such actions in response to economic growth that has slowed "dramatically" and more expensive capital.
- Ek said the music streaming giant debated making smaller reductions throughout 2024 and 2025, but decided that "a substantial action to rightsize our costs was the best option to accomplish our objectives," considering the gap between the firm's financial goals and its current operational costs.
The big picture: Many Big Tech firms made major cuts in the wake of a pandemic-driven economic slowdown starting in late 2022 and into 2023.
- Snap Inc. laid off 20% of staff in 2022. Meta laid off 13% of staff in 2022, and announced it would cut another 10,000 employees in 2023.
The bottom line: "By most metrics, we were more productive but less efficient," Ek said, reflecting on Spotify's efforts to become more profitable over the past year. "We need to be both."