Layoffs have hit music streaming giant Spotify (SPOT).
The company announced plans to cut 6% of its workforce, or about 600 employees, early Monday, a move that comes after a challenging 2022 for the business that saw Spotify stock lose more than two-thirds of its value.
In addition to staff cuts, Spotify announced an executive reshuffling, with Gustav Söderström and Alex Norström moving to the position of co-presidents.
Söderström will also serve as the company’s chief product officer; Norström will move into a role as Spotify’s chief business officer. Chief content officer and advertising business officer Dawn Ostroff will depart.
“While we have made great progress in improving speed in the last few years, we haven’t focused as much on improving efficiency,” Spotify CEO Daniel Ek wrote in a blog post on Monday. “We still spend far too much time syncing on slightly different strategies, which slows us down.
“And in a challenging economic environment, efficiency takes on greater importance. So, in an effort to drive more efficiency, control costs, and speed up decision-making, I have decided to restructure our organization.”
Spotify shares moved higher on the news, rising more than 6% in pre-market trading.
Spotify’s most recent financial results disappointed on the bottom line as the platform reported a wider-than-expected loss of $0.99 per share and another quarter of declining gross margins, which came in at 24.7% against expectations for 25.2%.
The company blamed its sinking bottom line on the renewal of a large publishing contract outside of the U.S., as well as softness in the ad market.
The company previously told it is looking to improve its rates of profitability beginning in 2023 on a gross margin and operating income basis, categorizing 2022 as a peak investment year as the platform dives into medium-to-long term investments.
One of those heavily invested areas has been podcasts.
Spotify has spent $1 billion pushing into the podcast market over the past four years, signing on celebrities like the Obamas, Prince Harry, and a Kardashian. The company paid $230 million to acquire podcast studio Gimlet in 2019. Spotify then paid a reported $200 million to bring Joe Rogan exclusively to the platform, and another $200 million for The Ringer in 2020.
“We believe 2022 will be the peak in terms of the negative impact of our investments on gross margins, and we expect podcasting gross margin to turn profitable over the next one to two years and on a meaningful ramp from that point onward,” Spotify CFO Paul Vogel echoed during the company’s investor day.
Spotify is set to report fourth quarter financial results on Tuesday, Jan. 31, before the market opens.