An Australian tech company has announced it has laid off 30 per cent of its workforce and is cutting costs elsewhere to achieve savings of $14.3 million a year.
Whispir, a cloud-based communications technology company that offers a platform for everything from crisis management to marketing and is listed on the ASX, struggled as its stock plunged 70 percent this year.
The cost-cutting measures have resulted in 80 employees being laid off as part of a plan “to establish itself as a profitable growth company,” said Whispir CEO Jeromy Wells, with around 70 percent of the affected roles in Australia and New Zealand based in the product and technology departments.
The announcement saw the stock price rise 31.3 percent on Tuesday to close 15 cents higher at 65 cents, although it had fallen 8 percent to 60 cents by Wednesday.
Whispir had seen a boom in demand for its services during the pandemic as government agencies tried to use its system to communicate with citizens who were in close contact or quarantined, but revenue has since fallen.
“The company has come through a period of significant growth which means there are now areas that can be scaled back to pre-Covid levels for a period as the company transitions to sustained and profitable growth without the need for additional capital ‘ Mr Wells added.
Team members affected by the cuts would have access to career support, job placement support and/or employee assistance programs, he added.
The reorganization would cost the company a total of $1.8 million, averaging $22,500 per employee, but would mean the company would break even in the third quarter of next year — ahead of fiscal 2024.
Part of the cuts would also include reducing its investments in research and development, and the company would move to a self-funded model in the long term, it said.
“With cash on hand of $17.1 million, the company does not need to raise capital to fund its ongoing operations and is positioning the company to maintain a strong balance sheet,” Whispir said in a statement to investors.
Experts had pointed out that Whispir’s biggest customer contributed $12.7 million in revenue last fiscal year, with $9 million expected to be just a one-time amount, while the company also announced that the revenue had declined in Australia.
It comes as the tech sector has been badly hit, both internationally and locally.
Last week, global payments processor Stripe laid off 14 percent of its workforce, affecting about 1,120 employees, after it was heralded as Silicon Valley’s most valuable startup last year at a valuation of $95 billion ($124 billion). was.
Well-known industry players have also announced thousands of job cuts.
Meta, formerly Facebook, announced it was laying off 13 percent of its workforce, bringing its workforce to 11,000 in the first round of layoffs in the company’s history recently.
Meanwhile, Amazon is set to lay off 10,000 employees in corporate and tech roles in the coming weeks, while Twitter’s new billionaire Elon Musk has also brutally cut its workforce and Microsoft has laid off at least 1,000 employees.
Netflix, the global streaming juggernaut, laid off about 450 employees from its global talent pool of 11,000 in two rounds of layoffs in May and June.
But Australia’s tech sector was also hit hard as investment and revenue dried up.
Brisbane-based telecoms and IT infrastructure company Megaport laid off about 10 percent of its employees in August, even as it said its revenue rose 40 percent to $109.7 million in the past fiscal year.
Meanwhile, social media startup Linktree, which was valued at $1.78 billion, laid off 17 percent of its employees from its global operations.
Australian healthcare start-up Eucalptys, which offers treatments for obesity, acne and erectile dysfunction, has laid off up to 20 per cent of its employees after an investment firm cut its funding at the last minute.
Another buy-now, pay-later provider with offices in Sydney, BizPay, laid off 30 percent of its workforce, blaming market conditions for the huge downsizing in May.
Earlier this year, a solar-focused start-up called 5B Solar, which boasts the backing of former Prime Minister Malcolm Turnbull, also laid off 25 percent of its employees after completing a capital raise that would bring the company $30 million .
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