Salesforce Plans 10% Job Cuts, Sees Upto $2.1 Bln In Restructuring Charges; Stock Up In Pre-market

(RTTNews) - Cloud-based software company Salesforce.com Inc. (CRM) announced Wednesday a restructuring plan, including job cuts, to reduce operating costs and improve operating margins.

The company estimates that it will incur around $1.4 billion to $2.1 billion in charges in connection with the Plan, of which around $800 million to $1.0 billion would be incurred in the fourth quarter of fiscal 2023.

As per the plan, the company will reduce its current workforce by around 10 percent and select real estate exits and office space reductions within certain markets.

Salesforce said its decisions regarding the elimination of positions are subject to local law and consultation requirements in certain countries, as well as the company's business needs.

The expected charges consist primarily of $1.0 billion to $1.4 billion related to employee transition, severance payments, employee benefits, and share-based compensation, as well as $450 million to $650 million in exit charges associated with the office space reductions.

Of the aggregate amount of charges related to the restructuring, approximately $1.2 billion to $1.7 billion are expected to be in future cash expenditures.

Salesforce expects its actions related to the employee restructuring to be substantially complete by the end of its fiscal 2024, subject to local law and consultation requirements.

The actions associated with the real estate restructuring under the Plan are expected to be fully complete in fiscal 2026.

In pre-market activity on the NYSE, Salesforce shares were gaining around 2.4 percent to trade at $138.