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Intuit shares slip as company plans to lay off 10% of global workforce

Published 07/10/2024, 09:08 AM
Updated 07/10/2024, 09:19 AM
© Reuters Intuit shares slip as company reportedly plans to lay off 10% of global workforce
(Updated - July 10, 2024 9:15 AM EDT)

Intuit (NASDAQ:INTU) will lay off roughly 1,800 global employees, or 10% of its workforce, according to a Wednesday press release. Per the announcement, the move is not aimed at cutting costs.

The company’s shares fell 1.8% ahead of the market open.

CEO Sasan Goodarzi said the decision is part of Intuit’s strategic transformation, focusing on AI and generative AI. The company aims to enhance its AI-powered financial assistant, Intuit Assist, and shift its products to AI-native experiences. Other strategic priorities include money movement, mid-market expansion for small businesses, and international growth.

“We do not do layoffs to cut costs, and that remains true in this case,” Goodarzi reportedly wrote.

The business software maker plans to hire around 1,800 new employees with specific skill sets in engineering, product, and customer-facing roles such as sales, customer success, and marketing. The company expects its overall headcount to grow in fiscal year 2025, starting August 1.

Of the 1,800 employees departing, 1,050 are underperforming based on a formal performance management process.

Goodarzi noted that these employees would be “more successful outside of Intuit.” Moreover, the company is reducing its executive count by approximately 10%, which includes directors, senior vice presidents, and executive vice presidents, while expanding certain executive roles and responsibilities.

Intuit is also consolidating 80 tech roles to growing technology hubs in Atlanta, Bangalore, New York, Tel Aviv, and Toronto.

The company will close two sites in Edmonton and Boise, affecting more than 250 employees, with some relocating to other sites within Intuit or leaving the company. Also, Intuit is eliminating over 300 roles across the organization to “streamline work and reallocate resources toward key growth areas," per the release.

Departing U.S. employees will reportedly receive a severance package that includes a minimum of 16 weeks of pay, plus two additional weeks for every year of service. They will have 60 days before their last day on September 9. Employees outside the U.S. will receive similar support, adjusted for local requirements.

The company expects to incur $250 million to $260 million in charges for its plan in Q4 fiscal 2024, ending July 31. This includes $217 million to $227 million in severance and employee benefits and $33 million in non-cash charges for share-based compensation and site closures.

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