Zoom cuts workforce by 15% as pandemic-driven demand wanes
Zoom is cutting about 1,300 jobs as demand for the company’s videoconferencing services slows with the waning of the pandemic.
While announcing the layoffs on Tuesday, which will hit nearly 15% of its workforce, the chief executive officer, Eric Yuan, said he would take a pay cut of 98% for the coming fiscal year and forgo his bonus.
“We worked tirelessly … but we also made mistakes. We didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably, toward the highest priorities,” Yuan said.
Zoom will incur about $50m to $68m in charges related to the layoffs, according to a regulatory filing on Tuesday. The company said a substantial part of it will be spent in the first quarter of fiscal 2024.
The company, which became a household name during lockdowns due to the popularity of its video-conferencing tools, has seen its revenue growth slow, and profits are estimated to have fallen 38% in 2022.
“I would say incrementally, maybe this is telling us we shouldn’t expect reacceleration in the near term on the revenue side, but we could see additional upside to margins for a company that is already profitable,” RBC Capital Markets analyst Rishi Jaluria said.
Zoom had bumped up hiring during the pandemic to meet surging demand, but now joins US companies in reining in costs to brace for a potential recession.
The announcement is the latest in a raft of layoffs that have hit the tech sector, from Amazon to Meta to Google. Companies have laid off thousands this year to ride out a downturn in demand wrought by high inflation and rising interest rates.
The video-conferencing software maker also said that its executive leadership team will reduce their base salary by 20% in the same period.
Departing employees will receive 16 weeks of salary, healthcare coverage and a bonus for the year, Yuan said.