New Zealand-headquartered fintech Xero has announced it will cut between 700-800 jobs across its business, with newly appointed chief executive Sukhinder Singh Cassidy announcing the company’s new operational “streamlining” and cost-efficiency drive this morning.
Xero said the headcount reductions would improve the company’s operating profitability, with the fintech stressing it is taking active steps to “reduce significantly” its operating expense-to-revenue ratio over the next financial year.
The company reports it has more than 4,500 staff worldwide, with offices in Australia, NZ, the UK, the US, Canada and Singapore.
“Along with reinvestment intro strategic priorities, management is targeting an operating expense to revenue ratio in FY24 of around 75 per cent,” Xero said in an announcement to the Australian Securities Exchange (ASX).
While its FY23 annual report is only due out in May, Xero said it anticipates operating expenses as a percentage of revenue will be around 80-85 per cent.
Singh Cassidy, who was appointed to head Xero in February this year, said the change was necessary to “build a higher performing global SaaS company” and enable its “next phase of growth”.
She added: “These changes, and our decision to reinvest in strategic areas, will adjust our operating cost base as we balance growth and profitability, while taking a robust approach to capital allocation that supports long-term value creation.
“Xero remains committed to its aspirational focus on continued operating efficiency over the long term and will take a disciplined approach to reinvestment of cash and generating long-term shareholder value.”
The fintech said that it also plans to offload Waddle, a cloud-based lending platform it acquired back in 2020. Xero said it will incur a $30-40 million write-down in FY23 from this divestment.
“These are difficult but necessary steps as we work to further strengthen Xero for the future, while carefully balancing the interests of all our stakeholders,” Singh Cassidy said.
She added: “We don’t take these decisions lightly and we recognise today is a very hard day for our people”.
Raised in Canada and an experienced Silicon Valley executive, Singh Cassidy succeeded Steve Vamos on 1 February 2023. Vamos helmed the organisation for nearly five years before announcing he would return to advisory, consultancy and professional coaching roles.
Xero reports upwards of 3.5 million subscribers to its primary cloud-based accounting software and other SaaS platforms.