Zoom Video Communications Inc. today announced plans to lay off 1,300 employees, or about 15% of its workforce.

All the company’s core business units are affected. The organizational structure of some units will be updated to streamline business operations.

“As the world transitions to life post-pandemic, we are seeing that people and businesses continue to rely on Zoom,” Zoom founder and Chief Executive Officer Eric Yuan (pictured) wrote in a blog post today. “But the uncertainty of the global economy, and its effect on our customers, means we need to take a hard – yet important – look inward to reset ourselves so we can weather the economic environment, deliver for our customers and achieve Zoom’s long-term vision.” 

Zoom will provide up to 16 weeks of severance pay and healthcare coverage to affected employees in the U.S. They will also receive annual bonuses, as well as stock option vesting for six months and outplacement services. Affected Zoom staffers outside the U.S. will receive similar support. 

In today’s blog post, Yuan announced plans to take a 98% pay cut and forgo the annual corporate bonus. Other members of the executive team will also forgo the bonus, as well reduce their base salary by 20% this year.

Zoom’s revenue jumped 326% year-over-year, to $2.65 billion, in the 12 months through Jan. 31, 2021 thanks to strong demand from consumers and remote workers. The company’s net income increased by a factor of more than 50 in the same time frame. But as workers began returning to offices, the company’s sales growth began slowing.

The company’s most recent earnings report revealed that its revenue grew 5% year-over-year, to $1.1 billion, during the fiscal third quarter ended October 31. It said it was experiencing “heightened deal scrutiny for new business.”

Its Online revenue segment, which covers revenue from customers that buy subscriptions through its website, declined 9% in the third quarter. But the company’s enterprise business grew 20% in the same time frame. It expanded its enterprise installed base to more than 209,300 organizations after adding about 5,000 new customers during the third quarter.

Zoom is investing in new product development as part of its efforts to maintain revenue growth. Last November, the company rolled out managed email and calendar services along with an artificial intelligence assistant called the Virtual Agent. The AI enables companies to automatically answer common customer service inquiries.

In November, the company forecast adjusted earnings of 75 to 78 cents per share for its fourth quarter ended Jan. 31. Analysts had expected it to forecast 81 cents per share. Zoom’s fourth-quarter revenue guidance of $1.1 billion was in line with the consensus estimate. 

“My commitment to you is that we will make sure the changes we are making to our team today are not made in vain,” Yuan wrote in today’s blog post. “We will learn from the past to set ourselves up for future success, and redouble our efforts to help evolve Zoom to tomorrow.”

Photo: Zoom