Zoom Video Communications said on Tuesday it would cut about 1,300 jobs, as demand for the company's video conferencing services slows with the waning of the pandemic, and take a related charge of up to $68 million..
The company's shares, which fell 6 percent last year amid a
rout in technology shares, closed up 9.9 percent on the news but were down
marginally in extended trading.
While announcing the layoffs, which will hit nearly 15
percent of its workforce, Chief Executive Officer Eric Yuan said he would take
a pay cut of 98 percent for the coming fiscal year and forego his bonus.
"We worked tirelessly... but we also made mistakes. We
didn't take as much time as we should have to thoroughly analyse our teams or
assess if we were growing sustainably, toward the highest priorities,"
Yuan said.
Zoom will incur about $50 million to $68 million 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.
Analysts are forecasting Zoom's revenue to have risen just
6.7 percent in fiscal 2022 after a more than four-fold jump in revenue and a
nine-fold surge in profit increase in 2021. Profit is estimated to have fallen
38 percent 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 to Alphabet 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 percent in the
same period.
Departing employees will receive 16 weeks of salary,
healthcare coverage and a bonus for the year, Yuan said. © Reuters
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