- Zoom (ZM) is laying off 1,300 employees, around 15% of its workforce, due to slowing demand for its video-conferencing services as the pandemic subsides. CEO Eric Yuan will also take a 98% pay cut and forgo his bonus for the coming fiscal year.
The company's revenue growth has slowed and profits are estimated to have declined 38% in 2022. The executive leadership team will also reduce their base salary by 20%. The layoffs will incur charges of $50 million to $68 million, mostly in the first quarter of fiscal 2024. Competition from other tech firms upgrading their video offerings has also posed challenges for Zoom, whose revenue tripled in 2020 and grew 55% in 2021, but slowed to single digits and profits dropped sharply.
Why it matters
The company, which became a household name during lockdowns due to the popularity of its video-conferencing tools, has seen its revenue growth slow, and profits are estimated to have fallen 38% in 2022. Adding to this from Amazon to Meta to Google, companies have laid off thousands this year to ride out a downturn in demand wrought by high inflation and rising interest rates.