“We hired too many people”

Salesforce CEO Marc Benioff puts to rest from the get-go in 2023 that he’s serious about improving profit margins, something Wall Street has pushed his leadership team to do in recent years.

On Wednesday, Salesforce announced it would cut 10% of its workforce and execute some real estate exits and office space reductions. The company declined to comment to Yahoo Finance on what real estate it would vacate or office space it would downsize.

Either way, the company now joins Meta, Snap and other tech giants in unleashing a major cost-cutting initiative amid more subdued demand.

“I’ve thought a lot about how we got to this moment,” Benioff said in a letter to employees. “As our revenues have accelerated during the pandemic, we have hired too many people leading to this economic downturn that we are currently facing, and I take responsibility for that.”

Marc R. Benioff, President and CEO of Salesforce, a member of the board of directors of the World Economic Forum, reacts while attending the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, January 23, 2018. REUTERS/ Denis Balibouse

Marc R. Benioff, President and CEO of Salesforce, a member of the board of directors of the World Economic Forum, reacts while attending the annual meeting of the World Economic Forum (WEF) in Davos, Switzerland, January 23, 2018. REUTERS/ Denis Balibouse

The company estimates it will incur between $1.4 billion and $2.1 billion in stock-related costs.

Salesforce shares — which have fallen about 44% in 2022 — rose 2.5% in premarket trading on the news.

The moves come as Salesforce is pushed by Wall Street to bolster its margins following a series of high-profile deals such as Slack, Tableau and Mulesoft.

Benioff has previously pushed back against the idea that Salesforce isn’t listening to investor concerns.

“For us, I think the market doesn’t fully appreciate how committed we are to growth and margins,” Benioff told Yahoo Finance Live at the software giant’s Dreamforce conference in San Francisco in late September.

Salesforce has committed to achieving an operating margin of 25% by calendar year 2025. If achieved, this would mark a notable increase from the 20.4% target set for 2022.

Brian Sozzi is editor-in-chief and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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