Just days after the Facebook parent company expressed its intention to begin downsizing, Meta has again announced that it will be laying off 13% of its staff or more than 11,000 employees.
As of September, the company had around 87,000 employees.
“Today, I’m sharing some of the most difficult changes we’ve made in Meta’s history. I’ve decided to reduce the size of our team by about 13% and let more than 11,000 of our talented employees go,” CEO Mark Zuckerberg said in a letter addressed to Meta employees.
While he expressed sympathy for the parties impacted by the decision, he explained that the company would also be taking more steps to become more efficient. The measures include cutting discretionary spending and extending its hiring freeze through the first quarter (Q1) of 2023.
“Recruiting will be disproportionately affected since we’re planning to hire fewer people next year,” the letter read. “We’re also extending our hiring freeze through Q1 with few exceptions.”
The layoffs began one month after Zuckerberg announced upcoming plans for Meta in a Facebook post.
“In 2023, we will focus our investments on a small number of high-priority growth areas. So, that means some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year,” the post read.
“In aggregate, we expect to end 2023 as either roughly the same size or even a slightly smaller organization than we are today.”
For Meta, 2022 has been a very tough year.
The revenue forecast for Q4 shared last month mimicked a prediction of the decline that had persisted throughout the other quarters this year. Meta stocks plummeted by 19% in extended trading, coming up well short of Wall Street’s expectations for earnings.
The company’s overall sales declined 4% to $27.71 billion in the quarter, while its operating income dropped 46% from the previous year to $5.66 billion.
Revenue from Reality Labs, the unit in charge of Zuckerberg’s metaverse, fared worse, taking in $3.67 in operational losses during Q3 with a total deficit of over $9.4 billion this year.
With the job cuts, Meta joins other tech companies that have announced layoffs and hiring freezes to combat macroeconomic headwinds and persistently high inflation.
This list includes Microsoft and Google parent Alphabet, Apple, Amazon, Coinbase, Stripe, Snap, and Elon’s decision to sack 3,700 employees after acquiring ownership of Twitter.
Investments Tanking = Large Scale Layoffs.
“I want to take accountability for these decisions and how we got here,” Mark Zuckerberg added.
In his letter, Zuckerberg spoke about the surge of e-commerce brought on by the COVID pandemic and his over-investment.
At that time, the surge produced outsized revenue growth such that many people, including Zuckerberg, predicted it would be a permanent acceleration that would continue even after the pandemic had subsided.
Unfortunately, the e-commerce trend was short-lived, and online commerce returned to full swing. In contrast to the increase in revenue, he predicted, “the macroeconomic downturn, increased competition, and ads signal loss have caused our revenue to be much lower than I’d expected.”
Moving on, Meta is expected to become more capital efficient. As he explained in the post last month, their focus would be on high-priority areas- “like our AI discovery engine, our ads and business platforms, and our long-term vision for the metaverse.”
CEO Mark Zuckerberg said the decision to let 11,000 employees go came after cutting costs across the business, scaling back budgets and reducing perks, and shrinking the real estate footprint did nothing to bring expenses lower than revenue growth.
Meta added that support would be provided for employees within the US and outside, giving details for US employees.
Others would be followed up using a separate process approved by local employment laws, but support will be similar outside the US.
For ex-Meta workers in the US;
- Severance for sixteen weeks of base pay plus two additional weeks for every year of service.
- Payment for all remaining PTO time
- RSU vesting
- Health insurance for workers and their families for six months
- Immigration support for individuals with working visas.
While affected Meta employees will have access to official systems revoked immediately due to sensitive information, address emails will remain active for everyone to say their goodbyes.
“The teammates who will be leaving us are talented and passionate and have made an important impact on our company and community. Each of you has helped make Meta a success, and I’m grateful for it. I’m sure you’ll go on to do great work at other places.”