Customer Belt-Tightening Leads to Elastic Layoffs Impacting 13% of Workforce

Elastic is laying off 13% of its workforce, or nearly 390 workers globally, citing decreased customer spending.

As of April 30, the security, observability and search vendor had nearly 3,000 employees in more than 40 countries globally. In addition to the layoffs, Elastic is reducing costs in other areas, including optimizing how it uses office space.

Elastic joins numerous other companies doing business in the channel that are laying off workers. Others include HP, Asana, Oracle, Salesforce, RingCentral, SADA and more.

Elastic announced the layoffs with its second-quarter 2023 earnings. Its revenue was a little more than $264 million, a 28% increase year over year. However, it reported a $47.3 million loss for the quarter, slightly higher than its loss for the year-ago quarter.

SMBs in Particular Spending Less

Elastic CEO Ash Kulkarni posted a blog detailing the layoffs.

Elastic’s Ash Kulkami

“We are fortunate that security, observability and search are mission-critical to our customers,” he said. “However, it has become clear that the global macroeconomic environment is forcing our customers to tighten budgets and review investments more closely. This is especially true in certain segments of the market like small and medium businesses where the current appetite to spend in uncertain times is limited.”

Elastic will focus on those areas of the business that are most critical to its future, and finding more efficient ways to service some parts of its business, Kulkarni said.

“This will enable us to navigate through this business climate and emerge even stronger in the future,” he said.

The vast majority of employees impacted by the layoffs have been notified, Kulkarni said.

“We operate in 45 countries, so in some cases the timing of notifications may vary based on local laws and practices,” he said. “An Elastic manager will reach out in the next 24 hours to set up meetings with those who are affected. I am confident we have the right strategy. We will continue to focus on developing the best cloud experiences for our customers and driving profitable growth.”

The Next 2 Years

With the layoffs and other reductions, Elastic expects to accelerate operating income growth in the second half of its fiscal 2023 and fiscal 2024.

“I know that this decision is the right decision for our organization,” Kulkarni said.

Elastic will “come out of this stronger and better prepared to grow our market share,” he said.

The company’s stock price fell approximately 10% Friday at the opening bell on Wall Street.