Spotify cuts 6% of workforce, content material chief to depart as CEO Ek stresses ‘effectivity’
Layoffs have hit music streaming large Spotify (SPOT).
The corporate introduced plans to chop 6% of its workforce, or about 600 workers, early Monday, a transfer that comes after a difficult 2022 for the enterprise that noticed Spotify inventory lose greater than two-thirds of its worth.
Along with employees cuts, Spotify introduced an government reshuffling, with Gustav Söderström and Alex Norström transferring to the place of co-presidents.
Söderström may also function the corporate’s chief product officer; Norström will transfer into a job as Spotify’s chief enterprise officer. Chief content material officer and promoting enterprise officer Daybreak Ostroff will depart.
“Whereas we’ve got made nice progress in bettering pace in the previous few years, we haven’t centered as a lot on bettering effectivity,” Spotify CEO Daniel Ek wrote in a weblog put up on Monday. “We nonetheless spend far an excessive amount of time syncing on barely totally different methods, which slows us down.
“And in a difficult financial setting, effectivity takes on better significance. So, in an effort to drive extra effectivity, management prices, and pace up decision-making, I’ve determined to restructure our group.”
Spotify shares moved increased on the information, rising greater than 6% in pre-market buying and selling.
Spotify’s most up-to-date monetary outcomes disenchanted on the underside line because the platform reported a wider-than-expected lack of $0.99 per share and one other quarter of declining gross margins, which got here in at 24.7% towards expectations for 25.2%.
The corporate blamed its sinking backside line on the renewal of a giant publishing contract outdoors of the U.S., in addition to softness within the advert market.
The corporate beforehand instructed Yahoo Finance it’s seeking to enhance its charges of profitability starting in 2023 on a gross margin and working revenue foundation, categorizing 2022 as a peak funding yr because the platform dives into medium-to-long time period investments.
A kind of closely invested areas has been podcasts.
Spotify has spent $1 billion pushing into the podcast market over the previous 4 years, signing on celebrities just like the Obamas, Prince Harry, and a Kardashian. The corporate paid $230 million to amass podcast studio Gimlet in 2019. Spotify then paid a reported $200 million to deliver Joe Rogan solely to the platform, and one other $200 million for The Ringer in 2020.
“We imagine 2022 would be the peak when it comes to the detrimental impression of our investments on gross margins, and we count on podcasting gross margin to show worthwhile over the subsequent one to 2 years and on a significant ramp from that time onward,” Spotify CFO Paul Vogel echoed through the firm’s investor day.
Spotify is ready to report fourth quarter monetary outcomes on Tuesday, Jan. 31, earlier than the market opens.
Alexandra is a Senior Leisure and Media Reporter at Yahoo Finance. Comply with her on Twitter @alliecanal8193 and e mail her at [email protected]
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