The Swedish streaming giant Spotify announced it would be laying off 17% of its workforce, in what is its third round of layoffs this year.
The cuts will affect around 1,500 people, CNBC reported. Some 600 people were laid off at the start and 200 roles were eliminated in June.
The layoffs are the latest sign of a struggling tech sector, which has been shedding jobs amid high interest rates and a difficult economic climate.
Spotify had attempted to expand dramatically in 2020 and 2021 by pivoting to audiobooks and podcasts in addition to music streaming, but has struggled to meet its profit goals.
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“In 2020 and 2021, we took advantage of the opportunity presented by lower-cost capital and invested significantly in team expansion, content enhancement, marketing, and new verticals,” CEO Daniel Ek wrote in a statement shared with all Spotify employees. “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.”
Since becoming a publicly traded company in 2018, the company has not yet had two consecutive profitable quarters, according to MacroTrends.
Based on stock prices, Spotify was worth approximately $35 billion before the latest layoffs announcement. It comes after the streaming giant reported a €65 million ($71 million) profit in the third quarter. “I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” Ek wrote.
Employees affected will be invited to have one-on-one conversations with HR by the end of the working day on Tuesday. Each affected employee will receive approximately five months of severance pay in addition to career support services.