Due to a slowdown in demand for its video conferencing services as the pandemic fades, Zoom Video Communications Inc. has announced it will cut roughly 1,300 positions and incur a charge of up to $68 million.
The company’s shares, which plunged 63% last year amid a crash in technology shares, closed up 9.9 percent on the news but slightly declined in extended trade.
CEO Eric Yuan said he would forgo his bonus and accept a pay cut of 98% for the upcoming fiscal year when he announced the layoffs on Tuesday, which will affect about 15% of the company’s workers.
“We worked tirelessly but we also made mistakes. We didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably, toward the highest priorities,” Yuan said.
According to a regulatory filing made on Tuesday February 7, Zoom will incur expenses connected to the layoffs of between $50 million and $68 million. The company said a substantial part of it will be spent in the first quarter of fiscal 2024.
Owing to the success of its video-conferencing tools, the company, which became well-known during lockdowns, has suffered a slowdown in the growth of its income.
Zoom increased recruiting during the pandemic to keep up with the high demand, but it is now joining US businesses in cutting costs to prepare for a possible recession.
The manufacturer of video conferencing software also announced that during the same time period, its executive leadership team will see a 20% reduction in base pay.
According to Yuan, departing employees would receive 16 weeks of pay, healthcare benefits and a bonus for the year, Yuan said.
Author-Roberta Appiah
