Zoom Video Communications Inc. has announced it is cutting about 1,300 jobs, about 15 percent of its workforce. The company has seen slowing growth after booming during the global pandemic as people sought more ways to stay connected amid lockdowns. Announced by CEO Eric Yuan, the needed restructure can be put on his shoulders and said he would reduce his salary and forgo his bonus.
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“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.”
After the announcement, shares of Zoom jumped nearly 10 percent on the New York Stock Exchange. Even though the shares rose to $85 per share, it is still 85 percent lower than the all-time high it saw in October 2020. Yuan stated that the “uncertainty of the global economy” is affecting its customers, even though they still rely on Zoom’s services.
Eric Yuan founded Zoom back in 2011, based in San Jose, California. His base salary was $302,000 last year and has said he will take a 98 percent reduction for the current fiscal year and forego his bonus. Including said bonus, his total compensation was $1.1 million last year. The rest of the executive leadership will take a 20 percent reduction on their base salaries.
Zoom’s headcount was around 2,500 people in January 2020, right before the onset of the pandemic. Since then the company has ballooned to around 8,400 people, which will now be reduced to early 2022 levels. The company added nearly 1,600 people during the 2022 year.
The company expects to incur $50 million to $68 million in costs, largely due to employee severance, with most reported in the current period ending in April, Zoom said in a regulatory filing.
