Spotify is eliminating about 1,500 jobs, or about 17% of its workforce, in its third round of layoffs this year as the music streaming giant looks to become “both productive and efficient.”

In a note to employees Monday, Spotify founder and chief executive Daniel Ek said right-sizing the workforce is crucial for the company to face the “challenges ahead.”

He cited the slow economic growth and rising capital costs among reasons for the job cuts, saying the firm took advantage of lower-cost capital in 2020 and 2021 to invest significantly in the business.

“I recognize this will impact a number of individuals who have made valuable contributions. To be blunt, many smart, talented and hard-working people will be departing us,” he wrote in the note, which the company later published on the blog.

Spotify employs about 8,800 people and will notify those impacted later in the day. The new wave of layoff follows Spotify cutting about 6% jobs in June this year and another few hundred employees in January.

Spotify reported strong user growth with a notable rise in monthly active users as well as paid customers in the most recent quarter. It also exceeded Wall Street’s expectations on operating income, and its guidance for the fourth quarter suggests a continuation of this positive trend.

But despite overall strength in user and subscriber numbers, and management’s assertion that every region exceeded expectations, growth in North American premium subscribers was only modest quarter-over-quarter. There was also a slight year-over-year decline in third-quarter premium average revenue per user (ARPU), with fourth-quarter forecasts suggesting ongoing challenges due to shifts in geographical and product mix.

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