Five9, a leading contact center products vendor, has announced plans to lay off approximately 7% of its workforce, affecting less than 200 employees. The company expects to incur costs of $12 million to $15 million related to severance payments and other expenses associated with the layoffs.
The layoffs are part of Five9’s broader efforts to improve profitability and increase shareholder value.
The company lowered its revenue guidance for 2024, indicating a need to reduce expenses.
Five9 maintains a strong channel partner network, with 80% of its sales generated through indirect channels. The layoffs are not expected to significantly impact these relationships.
Five9 CEO Mike Burkland expressed regret over the layoffs but emphasized the company’s focus on driving shareholder value and delivering for its customers. He remains confident in Five9’s future and the team’s ability to execute its strategic plans.
KeyBanc estimates that the layoffs could result in annual cost savings of approximately $35 million. These savings could positively impact Five9’s margins and enhance its profitability.
The layoffs are in line with Five9’s revised earnings guidance for 2024, which was lower than expected due to softer-than-anticipated bookings in the second quarter. Five9 recently announced plans to acquire Acqueon, a revenue generation platform provider, to bolster its generative AI capabilities.
Rumors surfaced in late 2023 about a potential acquisition of Five9 by Zoom, but Five9 denied these claims.
Overall, Five9’s decision to lay off a portion of its workforce is a strategic move aimed at improving profitability and positioning the company for long-term success. While the layoffs are unfortunate, they are expected to have a minimal impact on Five9’s channel partner relationships and its ability to deliver value to its customers.
