While announcing the layoffs, which will affect nearly 15% of its workforce, CEO Eric Yuan said he would take a 98% pay cut for the coming financial year and forego his bonus. — Reuters
NEW YORK: Zoom Video Communications Inc says it will cut about 1,300 jobs as demand for the company’s video conferencing services slows with the end of the pandemic, and will take a US$68mil (RM292.2mil) charge as a result.
While announcing the layoffs, which will affect nearly 15% of its workforce, chief executive officer Eric Yuan said he would take a 98% pay cut for the coming financial year and forego his bonus.
“We worked tirelessly, but we also made mistakes. We didn’t take as much time as we should have had to thoroughly analyse our teams or assess if we were growing sustainably towards our highest priorities,” Yuan said.
Zoom will incur about US$50mil (RM214.9mil) to US$68mil (RM292.3mil) 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 the financial year 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.
Analysts are forecasting Zoom’s revenue to have risen just 6.7% in the financial year 2022, after a more than four-fold jump in revenue and a nine-fold surge in profit increase in 2021. Profit is expected to fall 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.
A raft of US companies, from Goldman Sachs Group Inc to Alphabet Inc, have laid off thousands this year to ride out a demand downturn 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. — Reuters
