Zoom Axes 15% of Staff, CEO Takes 98% Pay Cut

Zoom Video Communications said Tuesday it would cut 15% of its workforce, or about 1,300 jobs, and trim base pay for its executive leadership as pandemic-fueled demand for the company’s video conferencing services slows.

Shares of the company rose about 9% on the news, after declining 63% last year.

Announcing the layoffs, Chief Executive Eric Yuan also said that he will take a salary cut of 98% for the coming fiscal year, foregoing his fiscal 2023 corporate bonus.

“We worked tirelessly… but we also made mistakes. We didn’t take as much time as we should have to thoroughly analyze our teams or assess if we were growing sustainably, toward the highest priorities,” the top boss said.

The company, which became a household name during lockdowns due to the popularity of its video-conferencing tools, has seen its revenue growth slow.

Analysts are forecasting Zoom’s revenue to have risen just 6.7% in fiscal 2022 after a more than four-fold jump in revenue and a nine-fold surge in profit increase in 2021. Profit is estimated to have fallen 38% in 2022.

Zoom had bumped up hiring during the pandemic to meet surging demand, but now joins U.S. companies is reining in costs to brace for a potential recession.

A raft of U.S. companies from Goldman Sachs Group Inc. to Alphabet Inc. have laid off thousands this year to ride out a demand downturn wrought by high inflation and rising interest rates.

The video conferencing software maker also said that its executive leadership team will reduce their base salary by 20% in the same period.

Departing employees will receive 16 weeks of salary, healthcare coverage and annual bonus for the year, Yuan added.