Spotify To Lay Off Hundreds As Big Tech Aggressively Downsizes
Spotify Plans were made to cut headcount by 6 percent due to macroeconomic Similar moves from prominent people can cause turmoil technology firms.
In a Monday meeting, Spotify CEO Daniel Ek informed employees note Music and audio platforms would help reduce headcount in order to improve operations. The announcement implies that 600 of the company’s 9,800 employees will lose their positions.
“While we have made great progress in improving speed in the last few years, we haven’t focused as much on improving efficiency. We still spend far too much time syncing on slightly different strategies, which slows us down,” Ek wrote. “And in a challenging economic environment, efficiency takes on greater importance. So, in an effort to drive more efficiency, control costs, and speed up decision-making, I have decided to restructure our organization.”
Note that the growth rate of operations expenditures is much higher than the revenue growth rate.
“That would have been unsustainable long-term in any climate, but with a challenging macro environment, it would be even more difficult to close the gap,” Ek continued. “As you are well aware, over the last few months we’ve made a considerable effort to rein-in costs, but it simply hasn’t been enough. So while it is clear this path is the right one for Spotify, it doesn’t make it any easier.”
The company’s third-quarter earnings report showed that total monthly active users increased year-over-year by 20% while revenue rose 21% over the same period. As a result, operating expenses rose 65% “higher personnel costs primarily due to headcount growth.”
Share prices for Spotify rose 3.7% on Monday morning; the company’s stock has plummeted more than 47% over the past year, outpacing a 9% decline in the S&P 500 and an 18% decline in the technology-heavy NASDAQ Composite.
Spotify is just one of many technology companies that have announced layoffs in response to recent events. overzealous hiring The sector and the wider economy. Microsoft revealed The company was expected to lay off approximately 10,000 workers, but Google will. reduce Amazon accounts for approximately 12,000 of its headcount. plans to dismiss 18,000 employees.
“Like many other leaders, I hoped to sustain the strong tailwinds from the pandemic and believed that our broad global business and lower risk to the impact of a slowdown in ads would insulate us. In hindsight, I was too ambitious in investing ahead of our revenue growth,” Ek continued. “I take full accountability for the moves that got us here today.”
According to a report by a, more than 46,000 employees were fired from American technology companies within the first month of 2023. report Crunchbase reports that 107,000 jobs were lost by firms in the sector last year, despite Crunchbase’s findings. Spotify has its headquarters in Sweden.
White House Press Secretary Karine Jean-Pierre deflected questions from journalists last week regarding the technology sector’s sudden increase in layoffs. One reporter pointed out that President Joe Biden appeared “quite optimistic” In his most recent statements on the economy, he asked whether the dismissals were a “matter of concern” for the administration. Jean-Pierre said that the commander-in chief watches “anytime there are reports of Americans losing their jobs.”
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