Pax8 Latest to Make Cuts to Global Workforce

Plenty of big tech companies went on a hiring frenzy at the onset of the pandemic, poaching top talent from each other and building up what looked to be a formidable army to prepare for a digital age. But a hangover soon followed when tech companies admitted to over-hiring. Many have made big cuts since then.

Late last week, Pax8 was the latest to announce workforce reductions. As ChannelFutures reported (and Pax8's John Trent, senior director of external communications, confirmed with ChannelE2E), the company has let go 5% of its workforce, mostly in North America. A Reddit thread posted an internal email allegedly received by Pax8 employees, but "We do not comment on leaked emails," Trent told Channel Futures.

Pax8's official statement said:

"Pax8 recently made the difficult decision to conduct a reduction in workforce. This move primarily impacted North America and was less than 5% of our global workforce. Parting with valued teammates is never easy, but these actions will enable us to optimize operations, increase alignment, and position our business for long-term success. We care deeply about our employees and are providing resources to those impacted to support their continued success. We remain laser-focused on creating an exceptional marketplace experience for our partners and vendors and empowering their growth."

The "leaked email" cited a number of economic factors impacting the decision, including industry contraction and slowed spending, higher interest rates and inflationary pressures, and leadership missteps.

"[W]e have watched the IT industry pull back from unfettered growth in 2019-2022 to a slower, cost-efficient model. Like many companies, we underestimated the importance of this shift from high growth at all costs, to a precise, cost-efficient growth approach during the pandemic’s aftermath. And, as leaders, we have not always provided clear priorities on the most effective ways to grow. We have had too many initiatives, diluting our efforts at times, and resulting in confusion for our teams and inefficient spending," the leaked letter stated.

Finally, the letter cited that "every company reaches an inflection point at which they need to become profitable, and that time is now for Pax8."

Pax8 Financial Milestones

In November 2022, ChannelE2E reported that Pax8 hit a $1 billion ARR (annual recurring revenue) run rate and expected to be EBITDA positive in early 2023.

In April 2022, ChannelE2E reported that Pax8 raised $185 million and a valuation of $1.7 billion. Investors in that round included Softbank, Catalyst Investors, Sageview Capital, Blue Cloud Ventures, and Liberty Global Ventures, the participants said.

Pax8 previously raised $96 million in funding in January 2021. The company fueled growth both organically and through M&A. Key moves included:

Other Layoffs Last Week

ConnectWise and Kaseya last week also announced layoffs; ConnectWise said in a prepared statement that it “...has undergone limited organizational changes to improve operations and ensure resources align with our partners' growth opportunities ... As part of these changes, the company has made the difficult decision to eliminate certain colleague positions. ConnectWise remains committed to our partners' experience and is confident in our plans to support their success.”

The Tampa, Florida-based software vendor, which has about 3,100 total employees, said the cuts impacted less than 100 workers.

And Kaseya earlier this month made what it called "performance-based terminations," telling CRN that the positions that were impacted would be “backfilled,” according to a statement from Xavier Gonzalez, Kaseya’s chief communications officer.

“There were no layoffs,” Gonzalez told CRN. “We had performance-based terminations, and all those roles will be backfilled. Kaseya will backfill each role with dedicated professionals who will prioritize our customers' success and better align with our company goals. It’s also important to note that Kaseya has hired approximately 1,000 people in Miami alone since the start of 2023, and now employs over 5,000 people globally.”

These are just the latest layoffs in what has become a familiar refrain in the industry. Less than a week after Broadcom finalized its $61 billion acquisition of VMware last year, layoffs began. This is a familiar pattern for the company, which followed a similar playbook with its acquisition of CA Technologies in 2018. Overall, it's estimated Broadcom will cut about 2,000 employees post-acquisition.

Google, Amazon, Snap, Splunk, LinkedIn, Cisco, MariaDB and SecureWorks all announced layoffs last year. Other mass layoffs recently included Intel, Wish and LinkedIn in the San Francisco Bay area.

At the beginning of September 2023, Rapid7 announced a restructuring plan following disappointing second-quarter results, resulting in the layoffs of about 18% of the company’s workforce.

Similarly, AppSec firm Snyk laid off 128 people in April 2023. Cloud security vendor Zscaler announced layoffs after what it called a rough fiscal second quarter 2023. Software tools giant Atlassian laid off 5% of its workforce as it “shifted priorities.” 

Accenture announced yet another round of layoffs in Austin in early October 2023 after axing 19,000 jobs, and Veeam laid off 3.8% of its workforce in August 2023.

Oxford, U.K.-based platform security vendor Sophos in January 2023 laid off 10% of its staff, or 450 workers, while San Francisco-based identity security giant Okta axed 5% of its workers – or roughly 300 employees in February 2023.

Layoffs.fyi, a website that has documented tech company layoffs since the COVID-19 pandemic began, reported that approximately 74,000 employees have been laid off thus far in 2024.