In a significant move to reduce costs and streamline operations, Spotify CEO Daniel Ek today announced a companywide layoff of approximately 17% of the workforce. This decision will impact roughly 1,500 employees across various departments and locations.
In a memo to employees, Ek explained that the economic downturn and rising capital costs caused this decision. He acknowledged that this action will affect many talented and dedicated individuals and expressed gratitude for their contributions to Spotify's success.
The layoffs are part of a broader strategic shift for Spotify, aiming to prioritize efficiency and focus on key stakeholders – creators and consumers. Ek emphasized the need for Spotify to become "relentlessly resourceful" and operate with a leaner structure.
Affected employees will receive a calendar invite within the next two hours for a one-on-one conversation with HR representatives. Severance packages, including pay, unused vacation time, continued healthcare coverage, immigration support, and outplacement services, will be provided to departing employees.
For the remaining Spotify team, Ek emphasized the importance of treating impacted colleagues with respect and compassion. He also stressed the need to embrace a more resourceful mindset, harkening back to Spotify's early days of innovation and agility.
The reduced workforce will allow Spotify to reinvest its profits more strategically, prioritizing impactful investments and initiatives. Ek emphasized that this strategic reorientation does not diminish Spotify's commitment to innovation and ambitious goals.
Spotify was not profitable in the first 2 quarters of 2023. The company reported an operating loss of €24 million in Q1 2023 and €4 million in Q2 2023. However, the company was able to turn a profit in Q3 2023, reporting an operating profit of €32 million.