Jan 23 (Reuters) – Spotify Technology SA (SPOT.N) On Monday, it planned to cut 6% of its workforce and take nearly $50 million in charges, adding to massive layoffs in the tech sector in preparation for a possible recession.
The tech sector faces a slump in demand after two years of pandemic-driven growth. It led to Meta Platforms Inc (META.O) For Microsoft (MSFT.O) Thousands of jobs will be lost.
“We’ve made a significant effort to control costs over the last few months, but it hasn’t been enough,” Chief Executive Daniel Elk said in a blog post announcing the approximately 600 job cuts.
“I’ve been very ambitious in investing ahead of our revenue growth,” he added, echoing sentiments voiced by other tech bosses in recent months.
Spotify’s operating expenses grew at twice the pace of its revenue as the audio streaming company poured cash into its podcast business, which is more attractive to advertisers because of its high engagement levels.
At the same time, businesses scaled back ad spending on the platform, mirroring a trend seen at Meta and Google parent Alphabet Inc. (GOOGL.O)Rapid interest rate hikes and fallout from the Russia-Ukraine war have squeezed the economy.
The company’s shares rose 5.8% to $103.55 and is now restructuring itself in an effort to cut costs and repair a deteriorating economic picture.
Dan Ostroff, head of content and advertising, is leaving after more than four years with the company, it said. Ostroff helped shape Spotify’s podcast business and the backlash surrounding Joe Rogan’s show, which allegedly spread misinformation about Covid-19.
The company said it will appoint Alex Norström, head of the freemium business, and Gustav Söderström, head of research and development, as co-presidents.
Spotify had about 9,800 full-time employees as of September 30.
($1 = 0.9196 euros)
Eva Mathews reports in Bangalore; Editing by Sherry Jacob-Phillips and Shailesh Kuber
Our Standards: Thomson Reuters Trust Principles.
“Friend of animals everywhere. Coffee maven. Professional food trailblazer. Twitter buff.”