Jan 23 (Reuters) – Spotify Technology SA (SPOT.N) said on Monday it plans to cut 6% of its workforce and take a related charge of up to $50 million, adding to the massive layoffs in the technology sector in preparation for a possible recession.
The tech industry is facing a slump in demand after two years of pandemic-induced growth during which it had been aggressively hiring. That has led companies from Meta Platforms Inc (META.O) to Microsoft Corp (MSFT.O) to cut thousands of jobs.
“We’ve put a lot of effort in recent months to contain costs, but it just hasn’t been enough,” CEO Daniel Elk said in a blog post announcing the roughly 600 layoffs.
“I was too ambitious to invest ahead of our revenue growth,” he added, echoing a sentiment expressed by other tech executives in recent months.
Spotify’s operating expenses grew twice as fast as revenue last year as the audio streaming company aggressively poured money into its podcast business, which is more appealing to advertisers due to higher engagement levels.
At the same time, companies pulled back advertising spend on the platform, following a trend seen at Meta and Google parent company Alphabet Inc (GOOGL.O), as rapid interest rate hikes and the fallout from the Russia-Ukraine war put the economy under pressure. putting pressure.
The company, whose shares rose more than 3% in premarket trading, is now restructuring itself to cut costs and adapt to the deteriorating economic picture.
It said Dawn Ostroff, the head of content and advertising, would be leaving after more than four years with the company. Ostroff helped shape Spotify’s podcast business and guided it through backlash around Joe Rogan’s show for allegedly spreading misinformation about COVID-19.
The company said it is appointing Alex Norström, head of the freemium business, and research and development boss Gustav Söderström as co-presidents.
Spotify had approximately 9,800 full-time employees as of September 30.
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Reporting by Eva Mathews in Bengaluru; Edited by Sherry Jacob-Phillips and Shailesh Kuber
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