Spotify is laying off 17% of its staff in an effort to cut costs, according to a recent announcement by CEO Daniel Ek. Ek officially announced the news on Monday via an internal memo sent out to all staff and eventually posted on the company website. The memo expressed understanding for the impact this will have on ‘a number of individuals who have made valuable contributions,’ as Ek stated ‘to be blunt, many smart, talented and hard-working people will be departing us.’ Spotify currently has over 9,000 employees, meaning the layoffs will affect approximately 1,500 individuals.
‘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.’
-Spotify CEO Daniel Ek.
Spotify appears to be experiencing steady subscriber growth, having recently reported 220 million paying subscribers, but the company has still struggled to be profitable. Due to expected multi-miliion dollar severance-related costs, Spotify announced they expect to post a Q4 operating loss of €93 million-€108 million (versus its prior guidance of operating income of €37 million).
The company already made a round of layoffs back in January, cutting 6% of its workforce and eliminating 600 jobs. Then in June, they laid off another 200 employees in an effort to reorganize to promote its podcasting business. The CFO, Paul Vogel, hinted at more layoffs in the pipeline during an earnings call last 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…’
-Spotify CFO Paul Vogel.
