Spotify (SPOT) on Monday announced it would cut 6% of its workforce to cut costs, while tech companies such as Amazon (AMZN) and Microsoft (MSFT) cut jobs as the global economy slowed.
In a letter to employees posted on the company’s website, CEO Daniel Ek took full responsibility for the job cuts, which he called “difficult but necessary.”
“Like many leaders, I want to maintain a strong tailwind from the pandemic and believed that our broader global business and reduced exposure to the impact of an advertising slowdown would shut us down. In hindsight, I was too ambitious to invest in revenue growth ahead of time,” he said.
The Stockholm-headquartered music streaming business had around 9,800 employees worldwide as of September 30, according to earnings reports.
The company’s shares, which have nearly halved over the past 12 months, are up more than 4% in pre-market trading in New York. Spotify’s stock is up 24% year-to-date, according to Refinitiv data.
Over the past few months, major tech companies have quickly reversed pandemic hiring, adding thousands of workers to meet surging demand from homes and businesses for services such as online shopping and video conferencing. I was allowed to.
The same company recently cut staff significantly as inflation weighed on consumer spending and rising interest rates weighed on funding. Demand for digital services during the pandemic has also waned as people return to living offline.
In the past three months, Meta, the parent company of Amazon (AMZN), Google (GOOGL), Microsoft (MSFT) and Facebook (FB), has announced plans to cut more than 50,000 employees from its overall ranks. bottom.
For the most part, recent job cuts represent only a relatively small percentage of each company’s overall headcount, essentially erasing last year’s increases at some companies, leaving huge workforces.
Spotify’s decision to cut about 590 jobs is part of a broader organizational restructuring to improve efficiency and “speed up decision-making,” Ek said. As part of the change, engineering and production work will be centralized. Chief Content Officer Dawn Ostroff has also decided to leave the company, Ek said.
Spotify reported a loss of €228 million ($248 million) in the most recent fiscal quarter ended Sept. 30, with operating expenses up 65%, according to the company’s presentation to investors. .
In 2022, operating expenses will grow at twice the rate of the company’s revenue, Ek said.
“It would have been unsustainable in the long run in any climate, but in a challenging macro environment, closing the gap will be even more difficult,” he told employees in a letter Monday. As such, we have made considerable efforts over the past few months to keep costs down, but it just wasn’t enough.”
— Claire Duffy contributed to this report.