Spotify is cutting about 1,500 jobs, or about 17% of its workforce, in its third round of layoffs this year as the music streaming giant looks to become “productive and efficient.”
In a memo to employees on Monday, Spotify founder and CEO Daniel Ek said right-sizing the workforce is critical for the company to meet the “challenges ahead.”
He cited slow economic growth and rising capital costs among the reasons for the job cuts, saying the company took advantage of lower capital costs in 2020 and 2021 to invest significantly in the business.
“I recognize that this will affect a number of people who have made valuable contributions. To be honest, a lot of smart, talented and hard-working people will leave us,” he wrote in the memo, which the company later published on the blog.
Spotify employs about 8,800 people and will notify those affected later in the day. The new wave of layoffs follows Spotify cutting around 6% of jobs in June this year and another few hundred employees in January.
Spotify reported strong user growth with a notable increase in monthly active users as well as paid customers in the most recent quarter. It also beat Wall Street expectations for operating income, and its fourth-quarter guidance suggests a continuation of that positive trend.
However, despite overall strength in user and subscriber numbers and management’s assertion that every region exceeded expectations, premium subscriber growth in North America was only modest quarter-on-quarter. There was also a slight year-over-year decline in Q3 average premium revenue per user (ARPU), with Q4 guidance pointing to continued challenges due to changes in geography and product mix.
“I realize that for many, a reduction of this size will be surprisingly large given our recent positive earnings report and performance. We discussed smaller reductions in 2024 and 2025,” Ek wrote.
“However, given the gap between the state of our financial goals and our current operating costs, I decided that a substantial action to balance our costs was the best option to achieve our goals.”
Industries worldwide have seen significant layoffs this year, totaling more than 225,000 employees, due to economic instability, higher interest rates and evolving consumer patterns. The tech sector, including companies such as Amazon, Google, Meta, Twitter and Netflix, is facing significant cutbacks, adding to economic distress among workers.
