BNPL company Affirm has undergone a restructuring after cutting a total of 500 employees, reducing its workforce by 19%.
The announcement of shrinking labour costs came from a statement by CEO Max Levchin published on the firm’s website, in which he explained the cuts were due to “dampened consumer spending” and Affirm’s increased borrowing.
Levchin said: “Growing rapidly over the last few years, and especially through the pandemic, we consciously hired ahead of the revenue required to support the size of the team.
“This was a deliberate decision: the product opportunities in front of Affirm were too compelling to ignore, and the revenue growth we posted gave us confidence in this strategy.
“Everything changed in mid-2022. Over the last three quarters, the Fed increased its benchmark rate at an unprecedented pace. This has already dampened consumer spending and increased Affirm’s cost of borrowing dramatically. The root cause of where we are today is that I acted too slowly as these macroeconomic changes unfolded.”
This is the latest in a string of mass layoffs in the tech sector. Online payments giant PayPal announced recently that it is gradually terminating the contracts of close to 2,000 employees.
PayPal CEO and President Dan Shulman also stated that the company is suffering from the “challenging macroeconomic environment,” and that it is still adjusting its cost structure.
“This will be a challenging period for our community, but I am confident we will come through it together with compassion for each other, our values at the fore, and a shared commitment to the future of PayPal,” Shulman added.