Zoom has announced that it will cut approximately 1,300 jobs and take a related charge of up to $68 million as demand for its services slows as the pandemic fades.
The company’s shares, which fell 63 percent last year amid a rout in technology stocks. It later rose 9.9 percent on the news but fell slightly in extended trading.
While announcing the layoffs on Tuesday, which will affect nearly 15% of the company’s workforce. CEO Eric Yuan said he would take a 98 percent pay cut for the coming fiscal year and forego his bonus.
“We worked nonstop… However, we also made mistakes. “We didn’t spend as much time as we should have on thoroughly analyzing our teams or determining whether we were growing sustainably and toward the highest priorities,” Yuan explained.
According to a regulatory filing on Tuesday, Zoom will incur charges ranging from $50 million to $68 million as a result of the layoffs. The majority of it, according to the company, will be spent in the first quarter of fiscal 2024.
The company’s revenue growth has slowed after it became a household name during lockdowns due to the popularity of its video-conferencing tools.
Analysts expect Zoom’s revenue to rise only 6.7 percent in fiscal 2022, following a more than four-fold increase in revenue and a nine-fold increase in profit in 2021.
Profit is estimated to fall 38 percent in 2022.
“I would say incrementally, this is telling us we shouldn’t expect revenue reacceleration in the near term, but we could see additional upside to margins for a company that is already profitable,” RBC Capital Markets analyst Rishi Jaluria said.
Zoom increased hiring during the pandemic to meet surging demand, but it is now joining US companies in cutting costs to prepare for a possible recession.
