London
CNN
—
Spotify
(SPOT) stated Monday that it’ll reduce 6% of its workforce to scale back prices, becoming a member of tech corporations together with Amazon
(AMZN) and Microsoft
(MSFT) in slashing headcount as the worldwide financial system slows.
In a letter to staff posted on the corporate’s web site, CEO Daniel Ek took full accountability for the job cuts, which he referred to as “troublesome however mandatory.”
“Like many different leaders, I hoped to maintain the sturdy tailwinds from the pandemic and believed that our broad international enterprise and decrease danger to the affect of a slowdown in advertisements would insulate us. In hindsight, I used to be too bold in investing forward of our income progress,” he stated.
The Stockholm-headquartered music streaming enterprise had about 9,800 staff globally as of September 30, in accordance with an earnings report.
The corporate’s inventory, which has almost halved in worth over the previous 12 months, gained greater than 4% in premarket buying and selling in New York. Spotify’s share value has risen 24% because the begin of the yr, Refinitiv knowledge reveals.
Over the previous few months, main tech corporations have swiftly reversed a pandemic hiring spree that noticed them add hundreds of employees to maintain up with a surge in demand from households and companies for companies resembling on-line purchasing and videoconferencing.
The identical corporations have lately made deep cuts to their workforces, as inflation weighs on shopper spending and rising rates of interest squeeze funding. The demand for digital companies throughout the pandemic has additionally waned as individuals return to their offline lives.
Over the previous three months, Amazon
(AMZN), Google
(GOOGL), Microsoft
(MSFT) and Fb
(FB)-parent Meta have introduced plans to chop greater than 50,000 staff from their collective ranks.
The latest cuts generally quantity to a comparatively small share of every firm’s general headcount, primarily erasing the final yr of positive factors for some whereas leaving them with huge workforces.
Spotify’s resolution to shed about 590 jobs is a part of a wider reorganization to enhance effectivity and “pace up decision-making,” in accordance with Ek. As a part of the modifications, engineering and product work will probably be centralized. Chief content material officer Daybreak Ostroff had additionally determined to depart the corporate, Ek stated.
Spotify reported a lack of €228 million ($248 million) in its most up-to-date monetary quarter by way of September 30, as working bills shot up by 65%, in accordance with an organization presentation to traders.
In 2022, working bills grew at twice the speed of the corporate’s income, Ek stated.
“That might have been unsustainable long-term in any local weather, however with a difficult macro surroundings, it might be much more troublesome to shut the hole,” he advised staff in Monday’s letter. “As you might be effectively conscious, over the previous couple of months we’ve made a substantial effort to rein-in prices, nevertheless it merely hasn’t been sufficient.”
— Clare Duffy contributed to this report.