Spotify shares were up more than 6.8% in pre-market trading Monday morning after news broke that it would lay off roughly 1,500 of its workforce in an effort for the audio streaming service to cut costs amid slowing growth.
CEO Daniel Ek sent an email to staff explaining the company hired too aggressively in 2020 and 2021 and would be taking “substantial action to rightsize our costs” by cutting 17% of its workforce, CNBC reported.
The news comes after a year that already saw major staff cuts—the company laid off 6% of its workforce (roughly 600 employees) early this year and another 200 people lost their jobs in June, according to CNBC.
Spotify reported its first quarterly profit in a year and a half in October with 65 million euros (about $70 million) in net income in the three months ending September 30.
In that same time period, Spotify’s monthly active users rose 26% and premium subscribers grew 16% year-over-year.
“I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” Ek’s email said. “While I am convinced this is the right action for our company, I also understand it will be incredibly painful for our team.”
$1. That’s the amount Spotify raised its monthly subscription price by earlier this year, which it said helped to boost revenue from its premium subscriptions by 10%.
Spotify released its ultra-popular “Wrapped” content last week, which allows users to see and share breakdowns of their listening activity. The company each year collects listening data from its users and tells them which artists and songs they listened to the most throughout the year and how that compares to the listening activity of others across the world. More than 574 million people use Spotify to listen to music, podcasts, audio books and more, and streams are counted toward Wrapped when users listen for more than 30 seconds at a time. In 2022, more than 156 million users looked at or shared their Wrapped data, Spotify told TIME.
