Jan. 23 (Reuters) – Spotify Technology SA (SPOT.N) On Monday, it said it plans to cut 6% of its workforce and will incur related fees of up to nearly $50 million, adding to massive layoffs in the tech sector in preparation for a potential recession.
The tech industry is facing declining demand after two years of pandemic-driven growth during which it employed aggressively. This has led to companies from Meta Platforms Inc (META.O) to Microsoft Corp (MSFT.O) To get rid of thousands of jobs.
“Over the past few months, we’ve gone to great lengths to rein in costs, but it simply wasn’t enough,” CEO Daniel Elk said in a blog post announcing the nearly 600 job cuts.
“I was very ambitious to invest before our revenue grew,” he added, echoing a sentiment other CTOs have expressed in recent months.
Spotify’s operating expenses grew twice as fast as its revenues last year, as the podcast company aggressively pumped money into its podcasting business, which is more attractive to advertisers due to higher levels of engagement.
At the same time, companies have cut back on ad spending on the platform, mirroring a trend seen in Meta and Google subsidiary Alphabet Inc. (GOOGL.O)Rapid increases in interest rates and the fallout from the Russo-Ukrainian War put pressure on the economy.
The company, whose shares rose 5.8% to $103.55, is now restructuring itself in an effort to cut costs and adapt to the deteriorating economic picture.
It said Dawn Ostroff, its head of content and advertising, is leaving after more than four years with the company. Ostroff helped shape and directed Spotify’s podcast business through the backlash over Joe Rogan’s show for allegedly spreading misinformation about COVID-19.
The company said it is naming Alex Norström, head of the freemium business, and head of research and development Gustav Soderström as co-chairs.
Spotify had about 9,800 full-time employees as of September 30th.
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Covering by Eva Matthews in Bengaluru; Editing by Sherry Jacob-Phillips and Shalesh Cooper
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