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Spotify has introduced one other spherical of lay-offs with Wall Avenue responding positively to the information. The SPOT inventory jumped 7.5% at present on the information.
CEO Daniel Ek announced the lay-offs at present, with round 1,500 individuals anticipated to be impacted (17% of 9,241). In a memo despatched to workers, Ek mentioned the slowing financial development and rising prices had been guilty for the cuts throughout the board as Spotify seeks profitability.
“As we speak, we nonetheless have too many individuals devoted to supporting work and even doing work across the work slightly 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 workers have had a brutal 2023—that is the third spherical of layoffs performed this 12 months. The cuts started in January when Ek introduced Spotify would scale back its headcount by 6% or round 600 workers 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 had been obligatory after Spotify’s wild development through the pandemic.
Ek defended his decision to develop the corporate at such a speedy tempo, however now says “we discover ourselves in a really totally different setting.” These impacted by this newest spherical of lay-offs will obtain 5 months of severance pay and continued protection underneath their healthcare plans. The trouble comes as Spotify makes an attempt to grow to be a worthwhile firm by 2024 slightly than targeted on development in any respect prices.
Spotify raised its costs throughout all of its plans this 12 months, serving to it submit a quarterly revenue as month-to-month lively customers (MAUs) rose to 574 million. Spotify Premium subscribers had been up 16%, whereas MAUs have risen 26% in comparison with the identical interval final 12 months. Regardless of the worth hikes, Spotify’s MAU development this quarter was the second largest Q3 enhance within the firm’s historical past.
