Spotify Technology SA on Monday mentioned it plans to cut back head rely by 17%, which might mark the third time the audio streaming group has introduced layoffs cuts this yr.
The Wall Street Journal mentioned the cuts would equate to about 1,500 jobs.
The transfer was introduced by Chief Executive Officer Daniel Elk in a letter to workers that was posted on the corporate’s web site.
“Economic growth has slowed dramatically and capital has become more expensive. Spotify is not an exception to these realities,” he mentioned, including that the “painful” cuts had been wanted to align the corporate with “future goals and ensure we are right-sized for the challenges ahead.”
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beforehand introduced 200 staff can be laid off in June and 600 staff in January.
Elk mentioned that he realized the brand new reductions appear “surprisingly large, given the recent positive earnings report and the company’s performance” — shares have soared 128% in 2023.
Analysts have credited Spotify’s share efficiency this yr to robust progress and improved profitability, however Citi downgraded the inventory final week, saying risk-reward is not engaging.
“We debated making smaller reductions throughout 2024 and 2025. Yet, 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,” he mentioned.
Elk defined that in 2020 and 2021, Spotify took benefit of decrease prices of capital and “invested significantly,” for instance in increasing the corporate’s group and enhancing conent.
“These investments generally worked, contributing to Spotify’s increased output and the platform’s robust growth this past year. However, we now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big,” he mentioned.
Source web site: www.marketwatch.com
