Salesforce (CRM) shares jumped higher Wednesday after the enterprise software group unveiled plans to cut around 10% of its global workforce amid a restructuring strategy under stand-alone CEO Marc Benioff.
Salesforce said it will close some of its offices, while eliminating around 10% of its estimated 56,600 workforce, as it looks to reduce operating costs, improve operating margins and "continue advancing the company’s ongoing commitment to profitable growth". Salesforce said the job cuts, as well as the broader restructuring plans,, will cost between $1.4 billion and $2.1 billion, with a hit of around $1 billion expected over its fiscal fourth quarter.
"The environment remains challenging and our customers are taking a more measured approach to their purchasing decisions," Benioff said in a letter to Salesforce employees. "With this in mind, we’ve made the very difficult decision to reduce our workforce by about 10%, mostly over the coming weeks."
"I’ve been thinking a lot about how we came to this moment," he added. "As our revenue accelerated through the pandemic, we hired too many people leading into this economic downturn we’re now facing, and I take responsibility for that."
Salesforce shares were marked 3.1% higher in early afternoon trading Wednesday to change hands at $138.93 each.
Last month, Benioff was left as stand-alone CEO of the San Francisco-based group after Bret Taylor said he would leave the company just a year after becoming co-CEO.
Taylor's departure cast a pall over an otherwise solid third quarter earnings release for Salesforce, which reported a Street-beating bottom line of $1.40 per share as demand for its work-flow solutions remained solid. Group revenues, Salesforce said, rose 14% from last year to $7.84 billion, essentially matching analysts' estimates.
The group's remaining performance obligation, or RPO, a tally of its total deferred revenue and product backlog and a key industry metric, rose 11% from last year to $20.9 billion.
Salesforce repeated its forecast for full-year revenues in the region of $30.9 to $31.00 billion with non-GAAP earnings are expected to come in between $4.92 to $4.94 per share, a 19 cent bump from its August forecast.
