Audio streaming giant Spotify has decided to trim its global workforce by 17% amid a slowdown in advertising spending, a move that will impact over 1,500 employees.

In a message to staff, CEO Daniel Ek cited the gap between costs and “our current operational costs” as the key factor behind the restructuring, despite the company earning its first quarterly operating profit of €32 million in Q3 2022.

“I realize that for many, a reduction of this size will feel surprisingly large given the recent positive earnings report and our performance,” Ek wrote.

Over the past two years, Spotify invested heavily in content and podcasts to transform into an audio company, now reaching 456 million users globally.

But Ek admitted they have more work to do on building sustainable profits. Hence efficiency has become an urgent priority along with maintaining growth.

Impacted staff will receive invites for one-on-one conversations and formal layoff notifications starting Tuesday. The average severance being offered is approximately five months, based on tenure.

The Swedish company has nearly 10,000 employees currently, indicating over 1,500 job cuts in the process.

The restructuring comes amid a pullback in digital advertising spending by brands given the murky economic outlook. However, Spotify is better insulated compared to peers reliant majorly on ads.