Salesforce is laying off about 10% of its workforce, more than 7,350 employees, in the latest round of job cuts in the tech industry as corporations cut back on software and other spending.
The San Francisco cloud computing software company will also be closing some offices, according to a regulatory filing Wednesday.
“The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions,” said CEO Marc Benioff in a letter to employees. “With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10%, mostly over the coming weeks.”
Benioff, who co-founded Salesforce in 1999, recently became the sole CEO after Bret Taylor resigned as co-CEO and vice chairman in November.
Benioff said employees being released will receive nearly five months of pay, health insurance, career resources, and other benefits.
“This is a smart poker move by Benioff to preserve margins in an uncertain backdrop as the company clearly overbuilt out its organization over the past few years along with the rest of the tech sector with a slowdown now on the horizon," Wedbush analyst Dan Ives wrote in a client note.
Salesforce employs about 73,500 people.
The company anticipates $1.4 billion to $2.1 billion in charges related to its plan. That includes $1 billion to $1.4 billion in charges tied to employee transition, severance payments, employee benefits, and stock-based compensation. There will be $450 million to $650 million in charges for office closings. Approximately $800 million to $1 billion in charges are expected to occur in its fiscal fourth quarter.
Tech companies hired aggressively during the pandemic to keep up with soaring demand, but Salesforce had been growing rapidly since at least 2018. Its workforce more than doubled between then and 2021.
Employee restructuring efforts are expected to be mostly complete by the end of Salesforce's fiscal 2024. Actions related to its office closings are anticipated to be fully complete in fiscal 2026.
Shares of Salesforce Inc. rose nearly 5% before the opening bell.