Zoom Video Communications said on Tuesday that it will cut about 1,300 jobs as demand for the company’s video conferencing services slows as the pandemic passes and incur a related charge of up to $68 million. (about 560 rupees).
Shares of the company, which fell 6% last year amid a steep drop in technology shares, closed up 9.9% on the news but fell slightly in extended trading.
While announcing the layoffs of nearly 15% of the workforce, CEO Eric Yuan said he would take a 98% pay cut next fiscal year and waive bonuses.
“We worked tirelessly… but we also made mistakes. We didn’t spend a lot of time analyzing our teams thoroughly or assessing whether we were growing sustainably. , towards the highest priorities or not,” Yuan said.
Launch will incur about $50 million (about Rs. 410 crore) to $68 million (about Rs. 560 crore) in fees related to the layoffs, according to a regulatory filing on Tuesday. The company says a significant portion of that will be spent in the first quarter of fiscal 2024.
The company, which had become a household name during the shutdown due to the popularity of video conferencing tools, has seen revenue growth slow.
Analysts forecast Zoom’s revenue to grow only 6.7% in fiscal 2022 after revenue more than quadrupled and profit ninefold in 2021. Profits are estimated to fall 38% in 2022. .
“I would say gradually, maybe this tells us that we shouldn’t expect to pick up the pace again in the near term in terms of revenue, but we could see further gains in profits for a company.” The company is already profitable,” said RBC Capital Markets analyst Rishi Jaluria.
Zoom has ramped up hiring during the pandemic to meet growing demand, but is now joining US companies in controlling costs in preparation for a potential recession.
A wide range of American companies from Goldman Sachs to Alphabet has laid off thousands of people this year to weather a decline in demand caused by high inflation and rising interest rates.
The video-conferencing software maker also said its executive leadership team will take a 20% reduction in base salary over the same period.
Yuan said employees who quit will receive 16 weeks of pay, health care insurance and bonuses for the year.
© Thomson Reuters 2023
