adminZoom Video Communications is eliminating 15 percent of its workers as the service that became ubiquitous during the pandemic adapts to slower growth.
The company will cut about 1 300 jobs as part of a restructuring, chief executive officer Eric Yuan said Tuesday in a blog post. Yuan called himself “accountable” for the company’s issues and said he would reduce his salary and forgo his bonus.
“Our trajectory was forever changed during the pandemic,” Yuan said, adding that Zoom headcount tripled in two years. “We didn’t take as much time as we should have to thoroughly analyse our teams or assess if we were growing sustainably.”
The reductions are a bigger share of the workforce than cuts announced at enterprise software companies including Salesforce, Microsoft and Workday. The shares gained 9,9 percent to close at $84,66 in New York, the biggest single-day jump in three months. Despite Tuesday’s rise, the stock has plummeted 85 percent from an all-time high in October 2020 and is now at pre-pandemic levels.
While people and businesses continue to rely on Zoom in post-pandemic life, the “uncertainty of the global economy” is affecting customers, Yuan said. After gaining millions of users at the height of the pandemic, Zoom is now trying to reverse slowing growth by expanding its tools for business.
Still, it has reported single-digit revenue increases for the last two quarters, and analysts project that sales have continued to decelerate in the current quarter. The cuts are likely a bid to preserve or improve margins in the face of slowing growth, wrote Bloomberg Intelligence analyst John Butler.
Competition from Microsoft’s Teams collaboration service has also become more of a concern for Zoom in recent quarters, — Bloomberg.
Online Reporter