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Spotify Technology (NYSE:SPOT) is laying off about 17% of its workforce to reduce costs, marking the third round of layoffs for the company this year.
In January, the music streaming service provider said that it was cutting nearly 6% of its workforce, while in June the company announced that it was laying off about 200 employees (nearly 2% of its headcount) in its global podcast division.
The latest round of cuts will affect about 1,500 people, according to media reports.
In a letter to employees, Spotify CEO Daniel Ek said that in 2020 and 2021 the company invested significantly in team expansion, content enhancement, marketing, and new verticals. These investments generally worked, contributing to Spotify’s increased output and the platform’s robust growth this past year.
“However, we now find ourselves in a very different environment. And despite our efforts to reduce costs this past year, our cost structure for where we need to be is still too big,” added Ek.
Ek noted that a reduction of this size would feel surprisingly large seeing the recent positive earnings report and the company’s performance.
“We debated making smaller reductions throughout 2024 and 2025. Yet, 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,” Ek commented.
In October, Spotify reported its third quarter results wherein revenue and numbers for monthly active users beat estimates.
Ek added that the company still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact.
SPOT +2.20% to $184.66 premarket Dec. 4