Spotify Technology SA is reducing its workforce by 17% in the company’s steepest cuts this year, part of an aggressive effort to shrink costs and drive profitability.

Employees affected by the layoffs will be notified today, the music-streaming company said in a statement. Roughly 1,500 jobs are being eliminated, a spokesperson said. Shares surged as much as 11% today to $201.42.

The streaming audio giant is on pace to add more than 100 million users in 2023 — its biggest year yet. And it reported a rare profit last quarter. But Chief Executive Officer Daniel Ek said in a note to employees today that Spotify is still spending too much, citing an economic slowdown and the rising cost of capital.

“We still have too many people dedicated to supporting work and even doing work around the work rather than contributing to opportunities with real impact,” Ek said in the statement. “More people need to be focused on delivering for our key stakeholders – creators and consumers.”

Spotify projected operating losses for the fourth fiscal quarter in the range of €93 million ($101 million) to €108 million, citing charges of €130 million to €145 million from severance payments and related real estate changes. It had previously projected operating income of €37 million.

Ek said that the Stockholm-based company had debated making smaller cuts during the next two years but ultimately decided on a “substantial action” to get costs in line.

The cuts follow a substantial period of growth for the company. Since 2020, its workforce nearly doubled. It employed 5,779 people at the end of the first quarter that year, and by the end of 2022, that number ballooned to more than 10,000.

This intense focus on cost reductions will accelerate its progress toward its gross-margin target of 30% and operating margin target of 10%.

Part of the reasoning for the cuts could be the company’s expansion away from the music business, which requires it pay a substantial portion of revenue to rights holders. To diversify, Spotify spent over a billion dollars on podcasting. It bought studios, ad technology and a platform for creating the content. In the years since those first acquisitions, it has scaled back its investment in audio series. In June, Spotify laid off 2% of its staff, primarily at its podcast studios, and parred back its original programming slate.

The company also cut 6% of its workers across departments in January. In total, more than 2,000 people have been laid off this year.

With these most recent layoffs, the company will focus on a leaner structure that will allow it to be more strategic about how it reinvests, Ek said. He’ll address the cuts on Wednesday in a meeting with employees.

“Economic growth has slowed dramatically and capital has become more expensive,” Ek said. “Spotify is not an exception to these realities.”