The following is a message New Relic CEO, Bill Staples, sent to the company in connection with the targeted restructuring announced in the Form 8-k filed this morning.
Relics,
I have some difficult news to share. Today we initiated a restructuring that will lead to the departure of approximately 155 Relics in the United States, and up to 57 internationally. We have sent a calendar invitation to each of these employees who are impacted. Prior to sending those invites, and in response to feedback, we have informed all managers and executives of impacted employees around the company to ensure they are ready to answer your questions and concerns throughout the day.
Leading up to today, each of our leaders conducted their own rigorous review with me across their respective functions to ensure that every resource will be aligned with our future needs. The roles impacted today reflect the outcome of that thorough review, which required difficult decisions around role redundancies, roles or skills not aligned with our strategic priorities, and the performance of individuals, teams, and programs. We will share more about the themes and strategic decisions by department in our company meeting tomorrow.
It will be difficult to say goodbye to these Relics, and will be even harder for them as they learn this news. Given the impact of these changes, it is important to take a step back and share context to the decisions that led us here, and express why I am confident that the changes we announce today are necessary to efficiently deliver on the promise of our company’s bright future.
As you know, we have been on a multi-year journey to transition our business into one that not only brings ubiquity to observability, but does so simply and profitably while sustaining a high growth rate. This goal has served as our North Star and we have made tremendous progress together. As we shared at our Analyst Day a few weeks ago, our consumption business has been growing above market growth rates, and New Relic now is more broadly adopted than any other Observability platform. Last year we turned a corner toward profitable growth and closed the last fiscal year exceeding $900 million dollars in revenue and over 10% non-GAAP operating margin.
What was once a distant goal, and years away when we began, is now within reach. After three years of steady progress, we are ready to make the final push to exit our subscription business in the next 4-6 quarters which will simplify our company and create a singular focus on consumption. We provided a detailed external presentation of our vision, business performance, product roadmap, and go-to-market strategy to investors at Analyst Day, I hope you were able to tune into the live stream, if not you are still able to view the materials at http://ir.newrelic.com/.
It is important to make this change now, to hasten the arrival of our future, especially in light of current economic uncertainty, which has caused every business to look for ways to be more efficient and optimize spend, including our customers’ consumption of New Relic. Now that we can more clearly see the post-transition business, financial profile and resourcing we will need, we are committed to act boldly so that we can accelerate our delivery of this promise, and thereby leave the days of “transition” behind.
Today’s announcement will reduce the number of Relics in nearly every function, level, and region. To achieve the vision we shared at Analyst Day, we will continue hiring for roles that are critical to our ability to deliver on our promise. The net effect of the headcount changes will be that we expect to exit this fiscal year at approximately the same headcount with which we entered, and will have a closer alignment with the skills, positions, and levels we need to achieve our goals for FY24 and beyond.
True to our core values and culture, we are ensuring that all Relics departing the company are taken care of to ease their transition. Each Relic departing will be receiving:
- Severance pay for three months and target bonus/incentives;
- Extended benefits coverage with COBRA premiums paid;
- Extended mental health and employee assistance benefits; and
- Individual career outplacement support to help find their next career opportunity faster.
We are taking this approach globally regardless of start date, and we may adjust some packages to align with local guidelines, as appropriate.
For Relics who are leaving, I want to express my sincere gratitude for your dedication and contributions during your time here.
For Relics who are not departing as a result of these changes, I ask for your patience as we focus on communication with the Relics who are impacted today and into Wednesday. Along with my leadership team, I will be hosting a Global All-Hands to share more information. Invites are on your calendar for June 28, 8:30-9:30 am PT. Should you have immediate questions, please connect with your organizational leader. In the meantime, please live our Connected core value and support your fellow Relics.
While the changes today are challenging, especially for those impacted, I am confident in the vision we have for the future, and that today’s change brings it even closer within reach.
-bill
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This blog post contains “forward-looking” statements, as that term is defined under federal securities laws, including but not limited to statements regarding the timing and anticipated impacts of the restructuring plan, our strategic goals and our ability to accomplish them, anticipated areas of growth, our plans to allocate and reallocate resources, and expected headcount trends and hiring plans and the anticipated impacts thereof. The achievement or success of the matters covered by such forward-looking statements are based on our current assumptions, expectations, and beliefs and are subject to substantial risks, uncertainties, assumptions, and changes in circumstances that may cause our actual results, performance, or achievements to differ materially from those expressed or implied in any forward-looking statement. Further information on factors that could affect our financial and other results and the forward-looking statements in this post is included in the filings New Relic makes with the SEC from time to time, including in the most recent New Relic Form 10-K and Form 10-Q, particularly under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Copies of these documents may be obtained by visiting the New Relic Investor Relations website at http://ir.newrelic.com or the SEC website at www.sec.gov. New Relic assumes no obligation and does not intend to update these forward-looking statements, except as required by law.
