Music streaming service Spotify will lay off 17 percent of its global workforce to cut costs as it struggles to make a profit.
CEO Daniel Ek announced the layoffs in an internal memo posted to Spotify’s website. The company employs more than 9,000 people worldwide, which means about 1,500 people will lose their jobs.
“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,” wrote Ek in the memo.
Per an SEC filing spotted by Variety, Spotify revised its Q4 2023 expectations to account for severance charges of about €130 million to € 145 million (about $190.2 to $204.8 million CAD). The company now expects a Q4 operating loss of €93 million-€108 million (roughly $$136 to $158 million CAD) compared to the original expected income of €37 million (about $54 million CAD).
Despite steady subscriber growth (the company had 226 million paying subscribers at the end of September), recent price hikes, and multiple rounds of lay-offs this year alone, Spotify has struggled to turn a profit.
Additionally, Spotify has gone on a spending spree in recent years as it tries to push its way into podcasting through acquisitions and expensive deals with popular figures like former president Barack Obama and Prince Harry and Meghan Markle.
Spotify’s shares jumped roughly 10 percent on the news, adding to the stock roughly doubling this year. Ek holds roughly nine percent of Spotify shares, and his net worth has risen to $3.3 billion USD (about $4.6 billion CAD).