Salesforce has announced that it's cutting some 10% of its workforce, impacting more than 7,000 employees, while it will also shutter offices in "certain markets."
In a letter to employees and a corresponding filing with the Securities and Exchange Commission (SEC), Salesforce CEO Marc Benioff referenced the "challenging" environment in which it's operating, pointing to the "more measured approach" its customers are making with their purchasing decisions.
Similar to other companies hit by significant layoffs over the past year, Benioff added that Salesforce had hired too many people through the pandemic during the boom times. For context, the company claimed 79,000 employees last February, a 30% increase on 2020.
"I’ve been thinking a lot about how we came to this moment," Benioff wrote. "As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that."
Benioff said that those impacted in the U.S. will receive a "minimum" of almost five months worth of pay, as well as health insurance and "other benefits to help with their transition." Outside the U.S., Benioff said workers can expect a "similar level of support."
The news follows just a few months after activist investor Starboard Value acquired a stake in the enterprise software company, with our analysis at the time concluding that Starboard was seeking cost-cutting measures as part of its investment. Certainly, Salesforce revealed an initial round of layoffs in early November affecting "hundreds" of workers, with co-CEO and co-chair Bret Taylor announcing shortly after that he would be stepping down.
With just four days into the new year, there is little sign of the economic headwinds easing, and today's news follows a slew of major layoffs last year including Facebook parent Meta which laid off 13% of its workforce and Stripe which cut 14%. Already reports abound that Tesla is gearing up for a fresh wave of redundancies in Q1 2023, while Amazon this week secured an $8 billion loan as part of its broader measures to counter the "uncertain macroeconomic environment."
As with just about every other tech company, Salesforce has been facing significant headwinds too. After hitting an all-time valuation peak of more than $300 billion in late 2021, Salesforce's market cap has experienced something of a "correction" in the intervening months, now sitting at around $134 billion -- roughly where it was at three years ago. The company also refused to provide a revenue forecast for 2023 at its most recent earnings report last year.
Salesforce said that the restructuring effort will cost it between $1.4 billion and $2.1 billion, which it expects to incur in Q4 of fiscal 2023.