Zoom Video Communications Inc has announced that it plans to cut about 1,300 jobs.
This comes as a surprise considering the platform's popularity. Representatives stated that the reason is the slowing down of demand for the company's conferencing video production services with the waning of the pandemic.
The company's shares fell 63% last year amid a round of technology shares and closed up 9.9% on the news but were down marginally in extended trading.
While announcing the layoffs, which will hit nearly 15% of its workforce, Chief Executive Officer Eric Yuan said he would take a pay cut of 98% for the coming fiscal year and forego his 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," Yuan announced.
According to a regulatory filing on Tuesday, Zoom will incur about $50 million to $68 million in charges related to the layoffs. The company said a substantial part will be spent in the first quarter of fiscal 2024.
"I would say incrementally, maybe this is telling us we shouldn't expect reacceleration in the near-term on the revenue side, but we could see additional upside to margins for a company that is already profitable," explained RBC Capital Markets analyst Rishi Jaluria.