Spotify has introduced one other spherical of lay-offs with Wall Road responding positively to the information. The SPOT inventory jumped 7.5% at this time on the information.
CEO Daniel Ek introduced the lay-offs at this time, with round 1,500 folks anticipated to be impacted (17% of 9,241). In a memo despatched to employees, Ek mentioned the slowing financial progress and rising prices have been in charge for the cuts throughout the board as Spotify seeks profitability.
“In the present day, we nonetheless have too many individuals devoted to supporting work and even doing work across the work quite than contributing to alternatives with actual affect,” Ek mentioned within the memo. “As we’ve grown, we’ve moved too distant from this core precept of resourcefulness.”
Spotify staff have had a brutal 2023—that is the third spherical of layoffs carried out this yr. The cuts began in January when Ek introduced Spotify would cut back its headcount by 6% or round 600 staff on the time. Six months later in June, one other spherical of cuts hit the podcast division with Spotify shedding greater than 200 positions there. Spotify says the layoffs have been needed after Spotify’s wild progress throughout the pandemic.
Ek defended his choice to develop the corporate at such a fast tempo, however now says “we discover ourselves in a really totally different surroundings.” These impacted by this newest spherical of lay-offs will obtain 5 months of severance pay and continued protection below their healthcare plans. The trouble comes as Spotify makes an attempt to change into a worthwhile firm by 2024 quite than targeted on progress in any respect prices.
Spotify raised its costs throughout all of its plans this yr, serving to it put up a quarterly revenue as month-to-month lively customers (MAUs) rose to 574 million. Spotify Premium subscribers have been up 16%, whereas MAUs have risen 26% in comparison with the identical interval final yr. Regardless of the worth hikes, Spotify’s MAU progress this quarter was the second largest Q3 improve within the firm’s historical past.