Yahoo on Thursday said it will eliminate about 1,000 jobs beginning this week, or roughly 12 per cent of its headcount, the first round of cuts in a larger plan to restructure its advertising tech division.
Separately, Deliveroo said it will cut about 350 jobs, or nearly one-tenth of its non-rider workforce, as it struggles to become profitable in a tougher consumer environment that has caused orders to slow.
Economic headwinds and rising interest rates have hit technology companies, leading firms to shed more than 150,000 workers globally as they rein in costs to ride out a global downturn.
A slump in advertising spending by businesses hit by rising inflation and higher interest rates has dented revenue for companies like Yahoo and News Corp, which publishes the Wall Street Journal.
News Corp said on Thursday that it will cut 5 per cent of its workforce, or 1,250 jobs, after falling short of a quarterly Wall Street estimate.
But Yahoo chief executive Jim Lanzone said on Thursday in an interview that the company’s job cuts are due more to the division’s restructuring than troubles in the ad market. “We would have made these changes even at the peak of the market,” he said.
Yahoo is “still hiring aggressively”, Mr Lanzone added, and employees who lose their jobs will be considered for other roles at the company.
Yahoo’s restructuring will lead to a new division called Yahoo Advertising, which will focus ad sales teams on the company’s properties, including Yahoo Finance, Yahoo News and Yahoo Sports.
Deliveroo founder and CEO Will Shu said the economic situation is now tougher and the company needs to sharpen focus on profitability after breaking even in the second half of 2022
“We now face serious and unforeseen economic headwinds,” he said in a company blog on Thursday. “Quite bluntly, our fixed cost base is too big for our business.”
Deliveroo has grown rapidly since it was founded in London a decade ago, and its riders – who are not directly employed – are now a familiar sight in towns and cities in nine countries.
Along with rivals Just Eat Takeaway and Uber Eats, its growth accelerated during the pandemic when people stuck at home ordered more meals.
Order numbers, however, slipped in its last quarter, even though their total value rose as restaurants increased prices.
Deliveroo shares have lost 40 per cent of their value over the last 12 months. The company has, over the last year, exited the Netherlands and Australia, where it had struggled to become a market leader.