Music streaming giant Spotify said in an email to employees on Monday that it will reduce its total headcount by around 17%, or about 1,500 employees, across the company.
CEO Daniel Ek said,
"Considering the gap between our financial goal state and our current operational costs, I decided that a substantial action to rightsize our costs was the best option to accomplish our objectives."
In a letter to employees, Spotify CEO Daniel Ek said the company hired more in 2020 and 2021 due to the lower cost of capital and while its output has increased, much of it was linked to having more resources.
In the third quarter, the company swung to a profit, aided by price hikes in its streaming services and growth in subscribers in all regions, and the company forecast that its number of monthly listeners would reach 601 million in the holiday quarter.
Ek states at that time the company was still focusing on efficiencies to get more out of each dollar.
On Monday, he said a reduction of this size will feel large given the recent positive earnings report and its performance.
"By most metrics, we were more productive but less efficient. We need to be both,"
Ek said.