Xero says it will cut up to 800 jobs. Photo: RNZ
New Zealand based software accounting firm Xero plans to shed up to 800 jobs to cut costs to improve profits.
Chief executive Sukhinder Singh Cassidy said the restructuring was needed to position the business for growth.
"To enable Xeroʼs next phase of growth and drive better customer outcomes, we need to streamline and simplify our organisation," Singh Cassidy said.
"These changes, and our decision to reinvest in key 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, founded and based in Wellington, but listed on the Australian Stock Exchange, offers cloud-based accounting services with more than 3.5 million subscribers and about 4500 staff with offices in New Zealand, Australia, North America, the UK and southeast Asia.
It gave no detail on where the cuts would occur.
"These headcount reductions will improve Xero's operating profitability as its operating expense-to-revenue ratio is expected to reduce significantly in FY24," Singh Cassidy said.
She said the restructuring was expected to cost between $25-35 million.
Aotearoa Tech Union spokesperson Geordie Rogers expected many job losses would occur in New Zealand, where Xero is based with substantial staff in product development, customer sales and support.
"These layoffs announced today will not guarantee the future of Xero, and they will not guarantee a profit," Rogers said.
"Xero joins companies we all know like Sharesies and Microsoft in prioritising their shareholders over workers," he said.
"They've chosen to destroy the jobs of hard working people in Aotearoa in order to reward shareholders overseas."
The company will also sell the Australian-based Waddle lending platform, bought in 2020, and write off $30-40m.
"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.
"We don't take these decisions lightly and we recognise today is a very hard day for our people."
Xero shares, which are only traded on the Australian stock exchange, surged as much as 11 percent to a six-month high, while investment analysts gave the moves the thumbs up.
"Reshaping and refocusing to better balance growth and profitability is positive in our view," analysts at RBC wrote in a note.