Salesforce CEO Marc Benioff is putting to rest right out of the gate in 2023 that he's serious about improving profit margins, which Wall Street has pushed his leadership team to do in recent years.
On Wednesday, Salesforce said it would slash 10% of its workforce and execute select real estate exits and office space reductions. The company declined to comment to Yahoo Finance on what real estate it would be exiting or offices it would be reducing.
In any case, the company now joins the likes of Meta, Snap, and other tech giants by uncorking a major cost-cutting initiative amid a more muted demand backdrop.
"I’ve been thinking a lot about how we came to this moment," Benioff said in a letter to employees. "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."
The company estimates it will incur $1.4 billion to $2.1 billion in charges related with the actions.
Salesforce shares — which fell about 44% in 2022 — rose 3.4% in afternoon trading on the news.
The moves come as Salesforce is getting pushed by Wall Street to bolster margins following a string of high-profile deals such as Slack, Tableau, and Mulesoft.
Benioff has previously pushed back on the view that Salesforce isn't listening to investor concerns.
"For us, I think that 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 a 25% operating margin by calendar year 2025. If hit, it would mark a notable increase from 2022's goal of 20.4%.