“We hired too many people”
Salesforce CEO Marc Benioff is making a point right out of the gate in 2023 that he’s serious about improving profit margins, something Wall Street has been pushing his management team to do in recent years.
On Wednesday, Salesforce said it would cut 10% of its workforce and implement select real estate exits and reductions in office space. The company declined to comment to Yahoo Finance about which properties it would close or offices it would reduce.
In any case, the company now joins the likes of Meta, Snap and other tech giants in unleashing a major cost-cutting initiative amid a more muted demand backdrop.
“I̵[ads1]7;ve thought a lot about how we got to this moment,” Benioff said in a letter to employees. “As our revenue accelerated through the pandemic, we hired too many people which led into this economic downturn we are now facing, and I take responsibility for that.”
The company estimates it will incur $1.4 billion to $2.1 billion in charges related to the actions.
Salesforce shares — which have fallen about 44% in 2022 — rose 2.5% in premarket trading on the news.
The moves come as Salesforce is under pressure from Wall Street to bolster margins after a string of high-profile deals including Slack, Tableau and Mulesoft.
Benioff has previously pushed back on the view that Salesforce is not listening to investors’ concerns.
“For us, I think the market doesn’t fully appreciate how committed we are to growth and margins,” Benioff told Yahoo Finance Live at the software giant’s Dreamforce conference in San Francisco in late September.
Salesforce has committed to an operating margin of 25% by calendar year 2025. If hit, it would mark a noticeable increase from 2022’s target of 20.4%.
Brian Sozzi is a major editor and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.
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