Salesforce cuts 10% of workforce; CEO says company ‘hired too many people’

Part of the plan includes a 10% reduction in the current workforce, with a corresponding forfeit of some office space and other real estate in certain markets.

Salesforce CEO Mark Benioff said in a letter to employees that the company may have gotten ahead of itself during the economic surge that followed the post-vaccination stage of the COVID-19 pandemic.

“I’ve been thinking a lot about how we came to this moment,” he said. “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.”

Benioff expects the restructuring plan to result in as much as $2.1 billion in charges, of which as much as half would come from charges associated with employee transitions, severance payments and benefits.

The company reported third quarter revenue of $7.84 billion, an increase of 14% over the same period in 2021, though that was among its slowest-ever expansions.

Amy Weaver, the president and chief financial officer, said in November that during “this time of economic uncertainty, we remain committed to profitable growth and consistent operating margin expansion,” suggesting headwinds were a concern late last year.

Markets are getting hammered by fears of a global recession in 2023, with China and Europe among those expected to see heavy economic losses this year. Trading on the New York Stock Exchange, shares in Salesforce (CRM) nevertheless were up about 4.2% on the news to hit $139 per share by 11:40 a.m. EST.

Benioff become chairman and CEO after Bret Taylor stepped down from his position as vice chair and co-CEO in November.