Cambridge marketing-software firm HubSpot on Tuesday announced it would cut 7 percent of its workforce, about 500 people, and consolidate some of its offices amid slowing orders from customers.
“We came into 2022 anticipating growth would slow down from 2021, but we experienced a faster deceleration than we expected,” chief executive Yamini Rangan said in an e-mail to employees obtained by the Globe. “Unfortunately, the level of uncertainty in customer demand now tells us that we may have more challenging times ahead. We need to set ourselves up to weather this storm.”
HubSpot joins many other tech companies large and small that have made cuts after bulking up at the beginning of the pandemic, only to see sales fall off as the economy slowed and inflation rose. In January, Wayfair cut 10 percent of its employees, or 1,750 people; Google cut 12,000 jobs; and many smaller startups laid off workers as well.
Many companies over-hired not just because of the pandemic but also because of low interest rates, and the stock market boom encouraged sales growth over profitability, said Liz Herbert, an analyst who follows the software industry at research firm Forrester in Cambridge.
“That was totally acceptable the last several years,” Herbert said. “Now, with more challenging dynamics, companies are being more conservative.”
HubSpot’s stock price, which had gained 20 percent so far in 2023, was down almost 1 percent at the close of trading on Tuesday.
Rangan said in her e-mail that the company over-hired as it sought to deal with a flood of new business at the start of the pandemic. The company grew from 4,225 employees at the end of 2020 to more than 7,400 this year.
Demand for HubSpot’s online marketing software, which helps companies reach and track customers, jumped amid a boom in e-commerce which has since tailed off. HubSpot’s revenue increased 47 percent in 2021 to $1.3 billion and another 35 percent to $1.3 billion in the first nine months of 2022. But analysts expect its revenue growth will slow to 20 percent in 2023.
The layoffs affected teams across the country and across the company, including marketing, customer support, and technical roles, according to LinkedIn posts from HubSpot employees.
Hannah Watson, 27, a remote worker in Florida who helps customers use HubSpot software, lost her job Tuesday and said she was not surprised about the layoffs, given the job cuts across the industry.
“You never think it will be you,” she said. “But I’m not shocked there are layoffs at HubSpot, seeing all the recent layoffs with Salesforce and other large tech companies.”
Laid-off HubSpot employees will receive five to seven months of severance, as well as extended medical benefits and equity vesting, according to Rangan’s e-mail. They may also keep company laptops and related gear.
The cost-saving plan will incur charges of $72 million to $105 million to cover the costs of employee severance and lease consolidations.
HubSpot, started in 2006 by Brian Halligan and Dharmesh Shah, has grown to become one of the Boston area’s largest software firms. Halligan stepped down as CEO after a snowmobile accident in February 2021, and Rangan, then the company’s chief customer officer, took over.
On Tuesday on Twitter, Shah offered his thanks to all of the employees who were laid off.
“It has been 16 years since HubSpot was founded, and we are making the necessary changes to (hopefully) have 16 more of Solving For The Customer,” he wrote.