Splunk Lays Off 1% Of Its Workforce Despite New Cloud Business “Going Through The Roof”

At the beginning of June, Splunk Inc. CEO Doug Merritt spoke about the future of the company, stating he wasn't in the position to commit to zero layoffs, as other CEOs like Salesforce's Marc Benioff had.

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Now, the company has announced it is cutting 70 of its 5,800 positions despite declaring its new cloud business is "going through the roof." This accounts for 1% of its current workforce.

Splunk has experienced massive growth in its cloud-based data analytics business as it transitions to new accounting standards. First quarter revenue increased 2% from a year ago, putting it up to $434 million.

The layoffs see Splunk join a number of other tech companies cutting staff and spending as the COVID-19 pandemic continues to wreak havoc on businesses.

Splunk's shares have recovered over the past few months, with investors betting on continued demand for software despite the slowing economy. However, this kind of pressure has placed significant weight on corporations across the industry to improve productivity, efficiency, and profitability, leading to layoffs.

During an earnings call, Merritt shed some light on the company's current position. "Customers across all sectors are trying to understand the economic impact of the current COVID-19 business environment," he conceded. "As a result, signed contracts this quarter tended to be shorter in duration, going from 34 months in Q4 to 27 months in Q1. We see this being especially prominent in sectors hardest hit by the crisis like retail, hospitality, and travel."

In an interview with Silicon Valley Business Journal, the executive expressed a desire to grow the company's headcount.

"I still believe that we'll wind up with a bigger company in all ways at the end of the calendar year 2020 versus what we entered calendar 2020," he said at the beginning of June. "Through Q1, that looks like the right decision as people are moving all digital really quickly and really dependent on IT infrastructure to actually work and cybersecurity resiliency and try and make sense of the data."

According to, 519 tech startups have laid off nearly 70,000 employees since March. The most recent company to lay off a significant portion of its staff is construction startup Katerra, who laid off over 400 employees one month after Paal Kibsgaard stepped in as CEO.