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Tech Layoffs: February Marks Third-Worst Month

Illustration of pencil eraser erasing workers

Good news: February layoff numbers for the U.S. tech sector were lower than those in January. Bad news: That’s not actually saying much.

Tech companies aren’t breaking up with their employees at the scale we saw in January, which was the biggest layoff month since we began tracking job cuts data in 2022 with over 65,000 layoffs.

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So February, by comparison to the brutal month before, seems relatively tame. But February still saw around 28,000 U.S. tech employees lose their jobs, making it the third-largest layoff month since the start of 2022.

While public companies have spent the last few months zig-zagging in layoffs numbers, startups are still cutting employees at a pretty steady cadence. In fact, for U.S.-focused startups, February was the second-largest layoff month after November 2022.

Public company layoffs cooled off after earnings

Where’s this change coming from? January’s layoffs were primarily driven by public companies, which were responsible for a record 93% of laid-off U.S. tech workers that month. Google parent company Alphabet slashed its workforce by 12,000 people, while Microsoft and Amazon let go of 10,000 and 8,000 employees, respectively.

Several of these cuts came ahead of, or during, disappointing Q4 earnings reports. Fintech platform Affirm announced during its earnings call that it would slash 19% of its workforce following missed revenue expectations. Three days before its Q4 earnings call, Twilio announced it would lay off 15,000 people.

Fast-forward to February: Large tech companies only made up about 82% of layoffs — still the majority by a long shot, but we saw worse in November, when 88% of workforce cuts were driven by public tech firms. In February, Ericsson laid off around 8,500 workers, while Dell cut 6,650 roles.

It’s also worth noting that, since 2022, about a quarter of public companies that announced layoffs announced additional cuts in the following months. Some, such ase Netflix, Twitter and Peloton, conducted three rounds of layoffs over the course of 14 months.

Startup layoffs remain consistent

For U.S.-focused private companies, February was the second-largest layoff month after November. Over 5,000 employees were let go last month, including those from companies such as Pico Interactive, which laid off 400, and Cerebral, which cut 285 employees.

That’s because the startup situation hasn’t really changed much. Venture funding is still down year over year, and most companies are still struggling to find capital (unless you’re OpenAI, in which case, you’re probably not in our layoffs database anyway).

Venture folks tell me investments will start picking up once valuations come down, which we’re already starting to see. The number of companies anointed unicorn status skyrocketed in 2021, but some of those are beginning to reset their valuation to make peace with the changing venture landscape.

“I think that camp is in really big trouble until they can actually justify their valuation,” Nolan Church, CEO of consulting firm Continuum and former people’s executive at stock option management platform Carta, told me. “I don’t think we’ve seen those companies being put through the crucible yet. Doing a layoff is not resetting your valuation.”

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Illustration: Dom Guzman

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