Ryan Petersen, chief executive officer of Flexport, participates in a panel discussion during the Milken Institute Global Conference in Beverly Hills, California, U.S., on Wednesday, May 4, 2022.
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Supply chain software startup Flexport is laying off 20% of its global workforce, or roughly 640 employees, according to a memo from co-CEOs Ryan Petersen and Dave Clark.
Petersen started Flexport in 2013 because he figured there had to be a better way to manage the flow of goods that get put on cargo ships, planes, trucks and railroads and transported all over the world. The company’s freight forwarding and brokerage services are in the cloud, enabling it to analyze costs, container efficiency, and greenhouse gas emissions quickly and with more accuracy than legacy systems.
The company topped last year’s CNBC Disruptor 50 list, as supply chain bottlenecks roiled the global economy and it raised $900 million from investors at an $8 billion valuation. But now the co-CEOs say the company is being challenged as higher interest rates around the world hit demand.
“While we are looking forward to what’s to come in 2023, we must also make hard decisions necessary to set us up for long-term success. We are overall in a good position, but are not immune to the macroeconomic downturn that has impacted businesses around the world. Our customers have been impacted by these challenging conditions, resulting in a reduction to our volume forecasts through 2023. Lower volumes, combined with improved efficiencies as a result of new organizational and operational structures, means we are overstaffed in a variety of roles across the company,” they wrote.
Last year, the company announced that Clark, the former worldwide consumer chief at Amazon, would take the helm as CEO of Flexport on Sept. 1, replacing Petersen, who plans to transition into the role of executive chairman this March.
“As the economy recovers, we will be ready to be the Flexport that we all want to be–the one stop for customers to make the movement of goods around the world easy. But to do that, we’re going to need to be nimble, fiscally responsible and focused on building fast with operational excellence,” the memo reads.
The company said layoff packages will vary by geography, but for U.S. employees will include 12 weeks severance, 6 months extended health care, 2022 bonus payment, equity vesting acceleration including dropping the vesting cliff for those with 6 months or more of tenure, immigration support, and ability to opt into an alumni talent directory to help with future job opportunities.
Flexport joins a long list of tech companies cutting jobs after going on a hiring binge during the Covid pandemic.
CNBC is now accepting nominations for the 2023 Disruptor 50 list – our 11th annual look at the most innovative venture-backed companies. Learn more about eligibility and how to submit an application by Friday, Feb. 17.
Reddit is ramping up efforts to attract more users outside of the U.S., putting countries like India and Brazil in focus as it looks to unlock new advertising opportunities, a top company executive told CNBC.
In a wide-ranging interview, Jen Wong, chief operating officer of Reddit, said other platforms have 80% to 90% of users outside of the U.S. while about half of her company’s current users are based internationally.
“So that points to a lot of our future user growth opportunity definitely outside of the U.S. and local language,” Wong told CNBC. “The opportunity, the way I think about it, is every language is an opportunity for another Reddit.”
Reddit has historically been an English-language platform, but the company is looking to expand its international reach with the help of artificial intelligence translations. This year, Reddit launched a feature that automatically translates its site into different languages.
Wong said that around 20 to 30 languages could be available by the end of the year.
India opportunity
Among the company’s fastest-growing markets in terms of users is the U.K., the Philippines, India and Brazil.
“India’s growing really rapidly,” Wong said. “We see a big opportunity in India.”
The Reddit COO said that India has a large English-speaking internet population, and there are lots of engaged users around topics like cricket and the Bollywood movie industry.
Wong also said Reddit has been meeting with “mods” — or moderators, who oversee content on communities on the site.
Advertising opportunity
Growth in markets like India can propel Reddit to boost ad revenue, its main source of income.
International markets account for just over 17% of Reddit’s revenue currently, according to the company’s third-quarter results, despite around 50% of its users being located outside the U.S.
Wong said that Reddit first attempts cross-border advertising for international markets, such as when a European brand is looking to advertise in the U.S. Then, when Reddit hits about 10% of a country’s internet population in a country, there is an opportunity to build teams focused on local advertising — like an Indian brand advertising to Indian users.
This has not yet happened in many markets, but Reddit is keeping an eye on many of its fastest growing countries, Wong said.
New search tools
Reddit users will know that it’s not always the easiest site to find what you’re looking for — a drawback that the company is now looking to change with new search tools.
During Reddit’s third-quarter earnings call last month, CEO Steve Huffman called search on the platform a “focused investment” in 2025.
Wong expanded that the company is thinking of its search feature as a way of helping users to navigate around the site to find similar topics or posts that they may have otherwise missed.
“You land on a post and but it’s almost like a dead end. But there are a lot of posts, often like that post, or there are other posts like that post in other communities. And so giving you a total view of what that looks like is a really interesting opportunity,” Wong said.
“Guiding you through Reddit as you follow that line of thinking, is how we think of the opportunity.”
Wong declined to say more except, “We’re testing a lot of things.”
Sam Altman, chief executive officer of OpenAI, during an event in Seoul, South Korea, on Friday, June 9, 2023.
SeongJoon Cho | Bloomberg | Getty Images
OpenAI is allowing employees to sell roughly $1.5 billion worth of shares in a new tender offer to SoftBank, CNBC has learned.
The new financing will allow the Japanese tech conglomerate to get an even larger slice of the AI startup, and it will allow current and former OpenAI employees to cash out their shares, two people familiar with the matter told CNBC.
Employees will have until Dec. 24 to decide if they want to participate in the new tender offer, which has not previously been reported, one of the people said. The deal was spurred by SoftBank billionaire founder and CEO Masayoshi Son, who was persistent in asking for a larger stake in the startup after putting $500 million into OpenAI’s last funding round, one of the people said.
The tender offer is not related to OpenAI’s potential plans to restructure the firm to a for-profit business, one of the people said.
OpenAI and SoftBank declined to comment.
The news underscores Son’s interest in the AI space and in backing the most valuable private players. SoftBank was an early investor in Arm, and Son said at a recent conference that he’s saving “tens of billions of dollars” to make the “next big move” in artificial intelligence. He had previously invested in Apple, Qualcomm and Alibaba.
SoftBank’s Vision Fund 2 recently invested in AI startups Glean, Perplexity and Poolside. SoftBank has about 470 portfolio companies and $160 billion in assets across its two vision funds.
The OpenAI investment matches SoftBank’s eagerness to deploy cash, with a capital-intensive business model, a person close to Son told CNBC.
Even without SoftBank’s deep pockets, OpenAI has had no trouble raising billions in cash. Its valuation has climbed to $157 billion in the two years since launching ChatGPT. OpenAI has raised roughly $13 billion from Microsoft, and it closed its latest $6.6 billion round in October, led by Thrive Capital and including participation from chipmaker Nvidia, SoftBank and others.
The company also received a $4 billion revolving line of credit, bringing its total liquidity to more than $10 billion. OpenAI expects about $5 billion in losses on $3.7 billion in revenue this year, CNBC confirmed in September with a person familiar with the situation.
OpenAI employees can cash out
The tender offer will be open to current and former employees who had been granted restricted stock units at least two years ago and have held the shares for at least that long, one of the people said. The unit price of $210 will align with the company’s most recent funding round.
Tender offers have become crucial for tech employees amid a dormant IPO market and skyrocketing company valuations. Private companies rely on such deals to keep employees happy and reduce the pressure to list on public markets. Since OpenAI has no initial public offering immediately on the horizon and a price tag that makes the company prohibitively expensive for would-be acquirers, secondary stock sales are the only way in the near future for shareholders to pocket a portion of their paper wealth.
Databricks is another private company raising money to allow employees to cash out and avoid public markets pressure, CNBC reported this week.
OpenAI took a more restrictive approach to tender offers in the past, with rules allowing the company to determine who gets to participate in stock sales, CNBC reported in June. Current and former OpenAI employees previously told CNBC that there was growing concern about access to liquidity after reports that the company had the power to claw back vested equity.
But the company reversed its policies toward secondary share sales this summer, and it now allows current and former employees to participate equally in annual tender offers.
The company expects to allow more of these secondary sales, and it will need to tap private markets again in the future based on demand from investors and the capital-intensive nature of the business, according to a person familiar with this week’s tender offer.
OpenAI has faced increasing competition from startups like Anthropic and tech giants like Google. The generative AI market is predicted to top $1 trillion in revenue within a decade, and business spending on generative AI surged 500% this year, according to recent data from Menlo Ventures.
Last month OpenAI launched a search feature within ChatGPT, its viral chatbot, that positions the high-powered AI startup to better compete with search engines like Google, Microsoft’s Bing and Perplexity.
Workday CEO Carl Eschenbach walks to a morning session at the Allen & Company Sun Valley Conference in Sun Valley, Idaho, on July 14, 2023.
Kevin Dietsch | Getty Images
Workday shares slipped as much as 11% in extended trading Tuesday after the human resources and finance software maker issued a quarterly forecast that came in below Wall Street projections.
For the fiscal fourth quarter, Workday called for an adjusted operating margin of 25% on $2.03 billion in subscription revenue. Analysts polled by StreetAccount were looking for a 25.5% margin and $2.04 billion in subscription revenue.
Here’s how the company performed during the fiscal third quarter compared with the consensus among analysts surveyed by LSEG:
Earnings per share: $1.89 adjusted vs. $1.76 expected
Revenue: $2.16 billion vs. $2.13 billion expected
Workday’s total revenue grew about 16% year over year in the quarter ended Oct. 31, according to a statement. Subscription revenue totaled $1.96 billion, up around 16%, consistent with the $1.96 billion consensus among analysts surveyed by StreetAccount.
The company reported net income of $193 million or 72 cents per share, up $114 million or 43 cents per share in the same quarter a year ago. The adjusted operating margin for the quarter was 26.3%. StreetAccount had expected 25.4%.
In some parts of the world, Workday is still facing more deal scrutiny than usual, Workday’s finance chief, Zane Rowe, said on a conference call with analysts.
Now the company is looking to grow its business in the U.S. government, CEO Carl Eschenbach said. “We think there’s a huge opportunity there with probably more than 80% of HCM and ERP still on premises,” he said, referring to human capital management and enterprise resource planning.
Earlier this month, President-elect Donald Trump announced plans for an advisory panel called the “Department of Government Efficiency.”
“People are absolutely looking to drive more economies of scale and more efficiency,” Eschenbach said.
Workday said Rob Enslin, the former Google and SAP executive who stepped down as UiPath CEO in June, was joining as president and chief commercial officer. In October, Workday told employees that Doug Robinson, a co-president, will retire.
During the quarter, Workday acquired contract lifecycle management software startup Evisort. Workday also said artificial intelligence agents for spotting inefficiencies, filing expense reports and updating succession plans would become available in early access in 2025.
“We think they’re going to have a nice impact on bookings and revenue as we go into the new year,” Eschenbach said.
Rowe called for $8.8 billion in fiscal year 2026 subscription revenue, good for 14% growth.
As of Tuesday’s close, Workday shares were down 2% in 2024, while the S&P 500 index had gained 26%.