Applications & OS News
Splunk Cuts Its Workforce About 4 Percent
The security and observability platform developer is laying off about 325 workers with most of the cuts in North America, according to an SEC filing.
Splunk is laying off about 4 percent of its workforce or about 325 employees, the unified security and observability platform developer disclosed in a filing with the U.S. Securities and Exchange Commission.
Splunk, headquartered in San Francisco, becomes the latest IT industry to undertake employee cutbacks in recent weeks. Just this week NetApp said it is laying off about 8 percent of its global workforce while earlier today Okta informed its employees of plans to cut about 5 percent of its workforce.
Other major companies that have instituted layoffs include SAP (about 3,000 jobs), IBM (about 3,900 workers), and Microsoft (10,000 jobs).
[Related: Tech Company Layoffs In 2023: The latest Cuts In Q1]
In a Form 8-K filing with the SEC on Wednesday, Splunk disclosed a reorganization plan that will cut approximately 4 percent of the company’s global workforce, with most of the layoffs in North America.
“Today, we are making the difficult decision to reduce our global workforce by approximately 4 [percent], mostly in North America,” Splunk president and CEO Gary Steele said in a note sent to Splunk employees on Wednesday and included with the SEC filing.
“This decision is another step in a broader set of proactive organizational and strategic changes that include optimizing our processes, cost structure and how we operate globally to ensure Splunk continues to balance growth with profitability through these uncertain times and drive success over the long term,” Steele said.
“The early proactive steps we’ve taken over the past several months have minimized the scale of the changes we are making now. Unfortunately, today’s decision impacts about 325 Splunkers across the company,” his note said.
The company estimates that it will incur approximately $28 million in charges and cash expenditures to cover the costs of the layoffs, including severance payments, employee retention and transition costs, and other expenses. The company expects to complete the layoffs in the current fiscal quarter that ends April 30.
“Decisions of this nature have a significant human impact, and I don’t take that lightly. Since I joined the company, I’ve often heard the phrase ‘once a Splunker always a Splunker.’ That statement couldn’t be more true than it is today,” Steel said in his note. “The people leaving the company are our fellow Splunkers, our friends, and have helped drive our success. I want to express my gratitude for the important contributions they’ve made to Splunk and to our customers,” he said.
“Looking ahead, we will continue to invest in the areas that got us to where we are today – including how we engage with customers, our innovation and our talent. This will include the select recruiting of new Splunkers in FY24, consistent with our focus on accessing global talent in lower-cost areas. At the same time, we will continually assess our organizational health, where and how we work, and how we deploy our team and resources to deliver customer and shareholder value,” Steele said.
The note also said that Splunk will decrease its reliance on “external resources,” such as agencies and consultants, to reduce costs.
News of the layoffs come as Splunk just closed out its fourth quarter and fiscal 2023 on Tuesday, Jan. 31. For the first three quarters (ended Oct. 31, 2022) of fiscal 2023 Splunk reported revenue of just over $2.40 billion, up nearly 36 percent from $1.77 billion in the first three quarters of fiscal 2022. The company also significantly cut its net losses to $546.7 million in the first three quarters of fiscal 2023 from $1.20 billion in the first three quarters of fiscal 2022.
Splunk’s shares closed at $106.99 Thursday, up 7.2 percent for the day and up more than 11 percent from Wednesday’s $96.15 opening price before the company’s SEC filing.
In October activist investor Starboard Value announced that it had acquired a stake in Splunk of just under 5 percent. In June 2021 private equity giant Silver Lake made a $1 billion convertible investment in the company and in early 2022 private equity firm Hellman & Friedman bought a 7.5 percent stake in Splunk.
Splunk’s executive ranks have undergone significant changes over the last 18 months. Steele took over as president and CEO in April 2022, replacing former CEO Doug Merritt who stepped down in November 2021. Sharyl Givens was hired as chief people officer in October 2022 and just last week the company announced the appointment of Brian Roberts, a former Lyft, Microsoft and Walmart executive, as the company’s new CFO.
CRN reached out to Splunk for additional comment, including whether the layoffs will impact the company’s channel operations, and a spokesperson provided the following statement:
“Splunk regularly assesses how our resources align to the evolving needs of our business. We’ve made the difficult decision to reduce our team by approximately 4 [percent], mostly in North America. This decision is another step in a broader set of proactive changes we’ve made over the past several months to ensure Splunk continues to balance growth with profitability through these uncertain times and drive success over the long term.”