Spotify said Monday it plans to cut 6% of its workforce and take a related charge of up to nearly $50 million, adding to mass layoffs in the tech sector in preparation for a possible recession.
The tech industry is facing slumping demand after two years of pandemic-fuelled growth during which it aggressively hired. That has led companies from Meta to Microsoft to cut thousands of jobs.
“Over the past several months we have made a considerable effort to control costs, but it just hasn’t been enough,” Chief Executive Daniel Elk said in a blog post announcing the cuts of about 600 jobs.
“I was too ambitious to invest ahead of our revenue growth,” he added, echoing a sentiment expressed by other tech chiefs in recent months.
Spotify’s operating expenses grew at twice the speed of its revenue last year as the streaming audio company invested money aggressively in its podcast business, which is more attractive to advertisers due to higher levels of engagement.
At the same time, companies cut ad spending on the platform, mirroring a trend seen at Meta and Google parent Alphabet, as rapidly rising interest rates and the fallout from the Russia-Ukraine war put pressure on companies. the economy.
The company, whose shares rose more than 3% in premarket trading, is now restructuring in an attempt to cut costs and adjust to the deteriorating economic outlook.
He said Dawn Ostroff, director of content and advertising, was leaving after more than four years with the company. Ostroff helped shape Spotify’s podcast business and guided it through backlash surrounding the Joe Rogan show for allegedly spreading misinformation about COVID-19.
The company said it will appoint Alex Norström, head of the freemium business, and head of research and development Gustav Söderström as co-chairmen.
Spotify had about 9,800 full-time employees as of September 30.