The call-center software firm, Five9, has announced plans to reduce its workforce by approximately 7 per cent, which equates to fewer than 200 employees based on its total of 2,684 full-time staff as of December 31. This workforce layoff plan is “part of the company’s broader efforts to drive balanced, profitable growth, further supporting our positive, long-term outlook and focus on increasing shareholder value,” as per a regulatory filing on Tuesday.
The San Ramon, Calif.-based provider of contact centre products expects to incur costs ranging from $12 million to $15 million for notice period payments, severance packages, employee benefits, and related expenses. According to the filing, Five9 will allocate most of these costs to the third and fourth quarters of this year.
Five9 has approximately 1,400 channel partners globally, with around 80 per cent of its total sales generated through indirect channels and alliance relationships, according to CRN.
In a regulatory filing and an email to employees signed by CEO Mike Burkland, it was announced that the company has made the difficult decision to lay off some team members. Burkland stated, “sadly, we have made the very difficult decision to say painful goodbyes to some of our team members.”
He added, “As you know, we recently announced in our earnings call that we reduced our revenue guidance for 2024 and will focus on improving profitability through managing expenses.”
Burkland further said, “Looking forward, Five9 is focused on driving shareholder value by increasing revenue, improving profitability, investing in our key strategic initiatives, and delivering for our customers. I have enormous confidence in Five9 and each of you as we continue to align and execute as one team.”
A report from KeyBanc on Tuesday estimated that the total savings from these cuts could be around $35 million, potentially increasing the firm’s EBIT for calendar year 2025 by over 20 per cent. KeyBanc described the workforce reduction as “a modest positive” that could improve Five9’s margins and noted that the contact-center-as-a-service (CCaaS) sector is well-positioned to benefit from AI and generative AI investments.
The report also indicated that the announcement aligns with Five9’s more cautious outlook for the second half of 2024, linked to weaker-than-expected bookings at the end of Q2 2024.