Sales Force Executives Marc Benioff is preparing to take a break in 2023 that he’s serious about improving margins, something Wall Street has pushed his leadership team to do in recent years.
On Wednesday, Salesforce said it would cut 10 percent of its workforce and make select real estate exits and cut office space. The company declined to comment to Yahoo Finance on the types of properties it will remove or the offices it will cut.
In any case, the company is now joining Meta, Snap and other tech giants by opening the door to a massive cost-cutting initiative amid more muted demand.
“I’ve been thinking a lot about how we got to this point,” Benioff said in a statement letter to staff. “As our revenue grew rapidly thanks to the pandemic, we hired too many people leading to the economic downturn we are facing and I take responsibility for that.”
The company is estimated to incur charges ranging from $1.4 billion to $2.1 billion in connection with these actions.
Shares of Salesforce — which has fallen about 44% in 2022 — was up 2.5% in pre-market trading.
The moves come as Salesforce is being pushed by Wall Street to increase profit margins after a series of popular deals like Slack, Tableau and Mulesoft.
Benioff previously dismissed the notion that Salesforce wasn’t listening to investor concerns.
“For us, I think the market is not fully appreciating our level of commitment to growth and profitability,” said Benioff. tell Yahoo Finance Live at the software giant’s Dreamforce conference in San Francisco in late September.
Salesforce has committed to achieving a 25% operating profit margin by calendar year 2025. If achieved, it would mark a notable increase from its 2022 goal of 20.4%.
Brian Sozzi is an editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and more LinkedIn.
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