Spotify (NYSE: SPOT) early this morning indicated that it will be cutting its total headcount by 17%, as the reality of slowing economic growth and expensive capital hits the company.
Daniel Ek, CEO of the music streamer, made the announcement in a note to its employees, stating that the reductions are necessary to ensure the company is “right-sized for the challenges ahead.” He spared no words, stating, “to be blunt, many smart, talented and hard-working people will be departing us.”
Ek then went on to state that they had debated taking smaller staffing reductions in 2024 and 2025 rather than a large cut up-front, before determining that the sharp initial cut was instead better to accomplish objectives and narrow the gap between their “financial goal state” and current operating costs.
Layoffs are anticipated to officially begin tomorrow, with severance for employees amounting to five months of pay, along with the payout of accrued and unused vacation, and health coverage for the severance period. The company also intends to provide immigration support for those who’s immigration status will be impact, along with career support for two months for all impacted employees.
The staffing reductions follow a 6% reduction conducted in 2023. The latest cuts are expected to impact approximately 1,500 jobs.
Spotify in its most recent earnings posted net cash flows from operating earnings of EUR$211 million, and free cash flow of EUR$216 million, on total revenues of EUR$3,357 million.
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