Zoom to cut 1,300 jobs, or 15% of global workforce

New York – Zoom Video Communications is eliminating 15 per cent of its workers as the service that became ubiquitous during the Covid-19 pandemic adapts to slower growth.

The company will cut about 1,300 jobs as part of a restructuring, chief executive Eric Yuan said on Tuesday in a blog post.

Mr Yuan called himself “accountable” for the company’s issues and said he would reduce his salary and forgo his bonus.

E-commerce giant eBay also joined in on Tuesday, announcing it will cut about 500 employees – or 4 per cent of its workforce – as the company continues to face slower consumer spending after the Covid-19 boom.

A number of major technology companies, worried about a slowdown in the broader economy, have also recently announced staff cuts after over-hiring during the pandemic.

Microsoft laid off 10,000 workers in January and Google’s Alphabet cut 12,000 jobs.

Salesforce, Meta, Amazon and PayPal have also reduced their workforces.

This week, Dell said it would lay off more than 6,500 employees.

In late January 2020 – before the Covid-19 outbreak was declared a national emergency in the United States – Zoom’s headcount was about 2,500. It has since added about 6,000 people.

The cuts announced on Tuesday will reduce Zoom’s total workforce to early 2022 levels.

“Our trajectory was forever changed during the pandemic,” Mr Yuan said, adding that Zoom’s 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.”

Zoom’s layoffs are a bigger share of the workforce than cuts announced at enterprise software companies, including Salesforce, Microsoft and Workday.

Mr Yuan, who is also Zoom’s founder, said his base salary, which was US$301,731 (S$400,000) in 2022, will be cut 98 per cent, and he will give up a corporate bonus for the current fiscal year. His total compensation for fiscal year 2022 was US$1.1 million. Others on the executive leadership will take 20 per cent base salary reductions.

Zoom’s shares gained 9.9 per cent to close at US$84.66 in New York on Tuesday, the biggest single-day jump in three months.

Despite this, the stock has plummeted 85 per cent 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, Mr 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. 

Competition from Microsoft’s Teams collaboration service has also become more of a concern for Zoom in recent quarters, according to industry analysts.

In an interview with Bloomberg in January, Zoom president Greg Tomb acknowledged the competition, but said companies using Zoom rarely quit the platform.

Mr Tomb added that the company’s biggest opportunity is getting existing customers to use the rest of its portfolio, which includes tools such as the Zoom phone service.

eBay’s sales have declined in the past six quarters as people shifted back to spending on experiences – such as travelling and dining out – that they postponed during the pandemic.

Analysts, on average, expect the company will report that revenue fell about 6 per cent to US$2.46 billion when it announces holiday-quarter results on Feb 22.

Amazon.com, eBay’s far larger rival, reported last week that online sales dropped 2 per cent in the holiday quarter.

Wayfair, an online home-goods retailer, said in January it would eliminate 1,750 jobs, or 10 per cent of its workforce.