Spotify will lay off some 6 per cent of its 6600-strong workforce as the streaming giant is the latest tech firm to undertake cost-cutting measures to cope with a struggling economy.
The Sweden-based company will shed some 400 employees who will be paid an aggregate of between $US38 million and $US48 million ($A54 million to $A68 million) in severance, according to Bloomberg News.
Spotify also announced the departure of Dawn Ostroff, the company’s chief content and advertising business officer. Ostroff leaves amid a company-wide reorganisation, NY Post reports.
A Spotify spokesperson referred The Post to a statement by company CEO Daniel Ek, who said the firm was seeking to “improve efficiency.”
“As part of this effort, and to bring our costs more in line, we’ve made the difficult but necessary decision to reduce our number of employees,” Ek said.
The CEO said management will initiate “one-on-one conversations” with “all impacted employees.”
“As you are well aware, over the last few months we’ve made a considerable effort to rein in costs, but it simply hasn’t been enough,” Ek said.
“So while it is clear this path is the right one for Spotify, it doesn’t make it any easier — especially as we think about the many contributions these colleagues have made.”
Terminated employees will receive approximately five months’ severance, accrued and unused paid time off, and health insurance during the severance period, according to Ek.
Spotify, a publicly traded company listed on the New York Stock Exchange, has seen its share price dip from an all-time high of $US364 in the winter of 2021 to just $US98 as of early Monday, local time.
Shares of Spotify are up by more than 4.6 per cent in pre-market trading as of 8am ET Monday.
The company is scheduled to announce its fourth-quarter earnings next week.
Spotify missed its earnings-per-share targets in both the second and third quarters of this fiscal year, though it barely beat revenue estimates as it saw growth in the number of paid subscribers.
As of October, the streaming service reported it had 456 million monthly active users for the third quarter — a year-over-year increase of 20 per cent.
Spotify also counted 195 million paid subscribers, which is up 13 per cent from the same period last year.
The announced lay-offs come days after Google’s parent company, Alphabet, said it would be culling some 12,000 jobs — or 6 per cent of its workforce — from its payrolls. The search engine employed some 187,000 people worldwide as of late last year.
Last week, Amazon began notifying its employees that it would be reducing headcount by 18,000 workers.
Microsoft also said it would be downsizing its workforce by some 5 per cent by laying off 10,000 people.
In the last year, an estimated 70,000 tech workers have been laid off from companies including Tesla, Robinhood, Snap, Netflix, Stripe, Shopify, Coinbase, Salesforce, Twitter and Meta.
This article originally appeared on New York Post and was reproduced with permission
For more latest Economy News Click Here