On Tuesday, Salesforce let go of fewer than 1,000 employees, according to a person familiar with the development who spoke with multiple agencies. Meanwhile, Zuckerberg confirmed that Meta is laying off more than 11,000 employees.
Meta CEO Mark Zuckerberg today confirmed his company would part ways with more than 11,000 or 13.16% of the 83,500+ employees. The social networking giant was expected to cut 15% of jobs as declining revenue and rising operating costs have significantly reduced the company’s net profitability.
Meta has faced a double whammy, first when Apple introduced what is considered a privacy-centric tool – App Tracking Transparency in iOS in April 2021, and then from rising inflation due to a brewing energy crisis and global macroeconomic uncertainty stemming from the conflict in Ukraine.
Meta’s market capitalization has slumped from over $1 trillion in September 2021 to $240.11 billion todayOpens a new window . Year-to-date, Meta’s stock has declined by 71.50%, with a 24.55% single-day drop observed on October 26, 2022, the day of its Q3 2022 earnings call, to a seven-year low of $96.47 per share.
In Q3 2022, Meta’s revenue declined by 4% to $27.71 billion, operating expenses rose by 19% to $22.05 billion, while its net income slid by 52% to $4.39 billion. For 2023, Meta expects its capital expenditure to be in the range of $34-39 billion, a significant chunk of which will go to RealityLabs, the division responsible for the development of Metaverse and other AR/VR products.
“I want to take accountability for these decisions and for how we got here. I know this is tough for everyone, and I’m especially sorry to those impacted,†Zuckerberg wrote in a blog postOpens a new window .
“We’ve cut costs across our business, including scaling back budgets, reducing perks, and shrinking our real estate footprint. We’re restructuring teams to increase our efficiency. But these measures alone won’t bring our expenses in line with our revenue growth, so I’ve also made the hard decision to let people go.â€
Meta is offering 16 weeks of base pay plus two additional weeks for every year of service as severance, encashment of paid time off, RSU vesting, six months of healthcare insurance, career services and immigration support to laid-off employees.
The Facebook, Instagram, Meta, and Oculus owner has also implemented a hiring freeze since July 2022. Going by the scale of the layoffs in Menlo Park, CA, it seems like the company is in the worst shape out of the five GAFAM (or GAMAM) companies.
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Layoffs at Salesforce
The latest round of layoffs, which come after some of the major Silicon Valley companies slashed their workforces, are a stark reminder of the difficult times ahead.
Salesforce also confirmed layoffs just a couple of weeks before its third-quarter earnings call, indicating that the company is already rationalizing based on what can only be assumed to be below-par numbers.
Protocol first reported layoffs at Salesforce on Tuesday though the number of people getting the ax, as confirmed by the company, is approximately half as much as initially reported (2,000). Compared to Twitter, which handed pink slips to nearly 3,700 people, almost half its workforce, the percentage of 73,500+ Salesforce employees getting the boot is marginally lower at 1.35%.
Like other tech companies, Salesforce’s quarterly revenue rose, both in Q1 and Q2 2022. However, the company is not doing so well when it comes to net income. In H1 2022, the company’s revenue stood at $15.13 billionOpens a new window , 22.98% higher year-over-year (YoY). During the same period, Salesforce’s operating expenses increased by 27.18% YoY ($8.45 billion to $10.74 billion) while its net income slid by 90.43% ($1.004 billion to $96 million).
The enterprise software developer also reduced its full-year revenue expectations from $31.7 to $31.8 billion at the end of Q1 2022 to $30.9 to $31.0 billion at the end of Q2 2022.
Additionally, in FY 2022 (12 months ended January 31, 2022), Salesforce earned $26.49 billion in revenue (net income $1.44 billion) and based on its Investor Day presentationOpens a new window from September 2022, the company is planning to increase this to $50 billion by FY 2026. Salesforce also plans to improve its non-GAAP operating margin to more than 25% by FY 2026.
As such, it is reasonable to expect Salesforce to have a dismal Q3 2022 and readjust its full-year guidance during its Q3 2022 earnings call later this month.
It is unclear how much of an impact the salaries of the less than 1,000 laid-off employees will have on Salesforce’s income statement or which divisions/departments were trimmed down.
Salesforce competitor Microsoft also offloaded nearly 1,000 employees in mid-October. At the time, just over 44,000 U.S-based tech workers were fired. The number has since risen to 52,000Opens a new window by the end of October and will increase by approximately 13,000 in just the last two days.
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