An Australian tech company has revealed it has let go of 30 per cent of its workforce and is slashing costs elsewhere in a move designed to deliver $14.3 million in savings a year.
Whispir, a cloud-based communications tech company that offers a platform for everything from crisis management to marketing and is listed on the ASX, has faced difficulties with its share value plummeting by 70 per cent this year.
The cost cutting measures have seen 80 staff let go as part of a plan to “establish itself as a profitable growth business”, Whispir CEO Jeromy Wells said, with around 70 per cent of the impacted roles based in Australia and New Zealand in the product and technology divisions.
The announcement saw its share price surge by 31.3 per cent on Tuesday, closing 15c higher at 65c, although by Wednesday it had dropped by 8 per cent to 60c.
Whispir had seen a boom in demand for its services during the pandemic as government agencies looked to use its system to communication with citizens who were close contacts or quarantine, but since then revenue has dropped.
“The company has been through a period of significant growth which means that there are now areas that can be scaled back to pre-Covid levels for a period as the company transitions to growing sustainably and profitably without the need for additional capital,” Mr Wells added.
Teams members impacted by the cuts would have access to career assistance, job placement support and/or employee assistance programs, he added.
The restructure would cost the company a total of $1.8 million, which represents an average of $22,500 per staff member but would mean the company would see its cashflow break even in the third quarter of next year – moved up from the 2024 financial year.
Part of the cuts would also include scaling back its investment in research and development and the company would move to a self-funded model long term, it said.
“With cash reserves of $17.1 million, the business will not need to raise capital to fund its ongoing operations and positions the company to maintain a strong balance sheet,” Whispir said in a statement to investors.
Experts had flagged that Whispir’s largest customer contributed $12.7 million revenue in the last financial year, with $9 million expected to be just a one-off, while the company also revealed that revenue in Australia had dropped.
It comes as the tech sector has taken a battering both internationally and locally.
Last week, global payment services provider Stripe sacked 14 per cent of its workforce, impacting around 1120 staff, after being heralded as Silicon Valley’s most valuable start-up last year with a valuation of $US95 billion ($A124 billion).
Well known players in the sector have also flagged thousands of job cuts.
Meta, formerly Facebook, revealed it would let go of 13 per cent of its workforce adding up to 11,000 staff in the first round of redundancies in the company’s history recently.
Meanwhile, Amazon was set to fire 10,000 employees in coming weeks in corporate and technology roles, while Twitter’s new billionaire owner Elon Musk has also brutally slashed its workforce and at Microsoft at least 1000 people have been let go.
Global streaming juggernaut, Netflix also sacked roughly 450 staff out of its 11,000 worldwide talent pool in two rounds of lay-offs in May and June.
But Australia’s tech sector has also been hard hit as investing and revenue dries up.
Brisbane-based telecommunications and IT infrastructure company Megaport sacked around 10 per cent of its staff in August despite announcing its revenue had jumped by 40 per cent to $109.7 million in the past financial year.
Meanwhile, social media start-up Linktree which was valued at $1.78 billion sacked 17 per cent of staff from its global operations.
Australian healthcare start-up Eucalptys that provides treatments for obesity, acne and erectile dysfunction fired up to 20 per cent of staff after an investment firm pulled its funding at the last minute.
Another buy now, pay later provider with offices in Sydney called BizPay made 30 per cent of its workforce redundant blaming market conditions for the huge cut to staffing in May.
Earlier this year, a start-up focused on the solar sector called 5B Solar, which boasts backing from former prime minister Malcolm Turnbull, also sacked 25 per cent of its staff after completing a capital raise that would inject $30 million into the business.
Story Credit: news.com.au