Xero to lay off up to 800 roles, exit Waddle

Derek Rose | March 9, 2023

Cloud accounting platform Xero says it will shed 700 to 800 jobs – roughly 15 per cent of its workforce – a day after Australian software giant Atlassian said it would axe 500.

Chief executive Sukhinder Singh Cassidy said on Thursday that while Xero had made strong progress executing its strategy, “we need to streamline and simplify our organisation.”

Xero also said it would exit its Sydney-based cloud lending platform Waddle, which Xero bought in 2010 for $31 million upfront and milestone payments of up to $49m. Xero expects to incur a writedown of $30m to $40m as a result of the decision. 

Ms Singh Cassidy said that these were “difficult but necessary steps” to strengthen Xero for the future.

“We don’t take these decisions lightly, and we recognise today is a very hard day for our people,” she said.

The company committed to working closely with impacted employees and providing them with the right level of support, she added. 

In a message shared with employees, Ms Singh Cassidy said she was “deeply sorry to be taking this step,” which she said was necessary because Xero had grown its headcount, areas of focus and cost base at a faster rate than revenue.

“Externally the broader tech landscape favoured high growth in this period; internally, we were less clear and measured in the rate of our hiring and investments,” she wrote.

Xero declined to break down the layoffs by region or role. 

“The impacted roles are across Xero’s business and affect all markets,” a spokesperson told AAP in an email. 

“We are not breaking down region by region or discussing specific job functions or areas.”

The Wellington-based company has 1305 staff in Australia and 2075 in New Zealand, according to Linkedin profiles. A total of 5655 people globally on the social media site say they work at Xero.

Waddle has 42 employees listed on Linkedin, with 37 of them in Australia, mostly in Sydney.

Laid-off employees will be given a minimum of 12 weeks pay – eight weeks in severance, plus additional severance based on tenure, as well as four weeks’ notice. They’ll also get to keep their laptops and US workers will get six months of health care.

Xero estimated the restructuring charges associated with the layoffs would cost it $25m to $35m, mostly in 2023/24.