F5 is cutting 9% of its workforce as the application security and delivery giant navigates macroeconomic uncertainty.
The layoffs impact 623 workers. F5 is also reducing executive bonuses, consolidating more office space, and moving some company events to virtual in a bid to cut costs.
In a memo to employees, F5 CEO François Locoh-Donou said “rising interest rates, geopolitical events, and macroeconomic uncertainty have dramatically affected our customers’ spending patterns” over the past six months.
“We do not believe this environment will persist, but we also do not know what the ‘new normal’ will look like when it comes,” he wrote. “Because of this uncertainty, we must take measures to decrease our costs without jeopardizing our future growth trajectory.”
The latest moves come after F5 already took steps to reduce expenses earlier this year, including slowing hiring, reducing office space, and minimizing travel. F5 had a separate round of layoffs in October.
Locoh-Donou said he will forgo his annual cash bonus for the current fiscal year, while the executive leadership team will reduce their bonuses by 70%. There will be further cuts to travel and expense budgets.
“These are extraordinary measures being taken under extraordinary circumstances,” he wrote in the memo.
F5 said it is offering “generous” severance packages, outplacement assistance, and immigration support, among other benefits.
F5 on Wednesday reported 11% revenue growth to $703 million for its fiscal second quarter. Non-GAAP net income increased to $154 million from $131 million in the year-ago period. F5 expects third quarter revenue between $690-to-$710 million.
The company said the layoffs will result in annualized savings of about $130 million. It will incur $45 million in costs related to the cuts.
F5 stock dropped nearly 5% in after-hours trading Wednesday. Shares are down about 33% over the past 12 months.
“Our strategy is unchanged,” Locoh-Donou wrote. “It is clear as I talk to customers, they want to work with F5 to address the complexity they face in deploying, managing, and securing their applications in this new world. I am confident our growth will accelerate as our customers resume their digital transformation efforts.”
