Zoom Video Communications announced on Tuesday that it would cut 15% of its employees, or approximately 1,300 jobs, and reduce base pay for its executive leadership as demand for the company’s video conferencing services declines due to the pandemic.
On the news, the company’s stock increased roughly 9%, after falling 63% the previous year. In addition to the layoffs, CEO Eric Yuan said that he will take a 98% pay cut for the upcoming fiscal year, forsaking his fiscal 2023 corporate bonus.
“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,” he said
The company’s revenue growth has slowed after it established a household name during lockdowns due to the popularity of its video-conferencing technologies.
Analysts expect Zoom’s sales to expand only 6.7% in fiscal 2022, following a more than four-fold increase in revenue and a nine-fold increase in profit in 2021. Profit is expected to plummet 38% in 2022.
Zoom increased staffing during the pandemic to accommodate growing demand, but it is now joining other U.S. corporations in cutting costs in preparation for a possible recession.
This year, corporations ranging from Dell, Goldman Sachs Group Inc, to Alphabet Inc have laid off thousands of workers in order to weather a demand slowdown caused by high inflation and rising interest rates.
In addition, the video conferencing software company announced that its top leadership team will drop their base income by 20% for the same time period.
Yuan noted that departing staff will receive 16 weeks of income, healthcare coverage, and an annual bonus for the year.
