Tech giants, from Amazon to Meta and more, have been laying off thousands of staff, cementing rumours of an ongoing recession. The economic downturn is not limited to the US, though. Ironically enough, Australian employee well-being company Limeade (ASX: LME) is laying off 15 per cent of its employees as part of its cost-cutting initiatives. It will also restructure its R&D, Product, Customer Operations, Customer Success, Marketing and Sales teams.
These downsizing trends have become commonplace across companies. In November 2022, Meta (previously Facebook) gave the pink slip to about 11,000 employees, hinting at—quite possibly—its worst financial struggle following a global economic slowdown. The ordeal, of course, has been worse for employees than employers, especially when you consider the emotional and mental cost of losing your job in such a turbulent market.
For Limeade, the costs of layoffs will amount to about $2 million, comprising severance payments and employee benefits. The resulting annualised savings, on the other hand, are expected to be around $10 million.
CEO Henry Albrecht shared, “This restructure is a difficult but necessary step. I speak on behalf of the Board and every company leader in sharing my heartfelt and immense gratitude to all of the LimeMates who have served our noble purpose.”
Founded in 2006, Limeade is an employee experience software company. It focuses on wellness and letting employees know that their company cares about them. It helps companies retain employees through their different programs.
In 2022, the Company recorded a loss of about $17 million, comprising a Covid-related decline in demand for biometric services, nearly $5 million in R&D personnel-related expenses and $1.45 million attributed to increased headcount.
Over the past three months, Limeade has undertaken major changes following its financial report. For starters, in November 2022, it got a new President and Chief Operating Officer on board, Dave Smith. Since then, the Company has signed three new three-year contracts worth millions.
On November 21, it signed a $15.17 million contract with US-based insurance company UPMC Health Plan, set to bring in over $5 million in annual revenue. On December 14, it signed a contract with food processing company Tyson Foods, wherein the Company will receive over $7 million. And finally, on December 28, it signed an agreement with global professional services firm Marsh McLennan worth $7.3 million, set to usher in contracted annual recurring revenue of $2.4 million.
The Company is hoping that these contracts—paired with the layoffs—will help bring its profits back up, which, in 2022, reduced by $3 million on the previous year.
Besides the layoffs, Limeade also announced the departure of its CFO Todd Spartz. He will leave the Company on January 18, 2023, to pursue another opportunity in the corporate sector. Till a new CFO takes over, the duties will be undertaken by the existing Limeade Finance team under the leadership of Controller Paul Crick.
At a time when companies are focusing on cost-cutting by de-prioritising any non-core investments and reducing employee strength, will these measures be enough to keep Limeade afloat?
Alinda is a Business Reporter for The Sentiment
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