Sales startup Outreach to lay off 70 employees, 7% of workforce, and slow office expansion

Outreach reached unicorn status in 2019. (GeekWire File Photo / Nat Levy)

Outreach is laying off 70 workers, about 7% of its workforce, marking the second round of cuts the Seattle sales software startup has made in the past six months.

A company spokesperson confirmed the headcount reduction to GeekWire Monday evening.

“Outreach regularly identifies the need to make operational and organizational adjustments to align with our strategic growth plan and path to profitability,” the spokesperson said.

In an email to staff, Outreach CEO Manny Medina said the company failed to meet annual recurring revenue targets for its most recent fiscal year.

“Even given the reduction in projected spending, we must find other savings in efficiencies and cut deeper,” he said in the email obtained by GeekWire. “In a software company, headcount is one of our greatest costs and, unfortunately, that means more layoffs within our Outreach team.”

Outreach will suspend merit increases and the expansion or relocation of offices, Medina wrote in the email.

The company laid off 5% of its staff in August. It has about 1,000 employees and offices in Prague, London, Atlanta, and Indianapolis, in addition to the Seattle headquarters.

The announcement comes amid a tech slowdown that has affected enterprise sales teams and slowed demand for sales software.

Many startups are being advised to lay off employees in an effort to reduce costs and extend cash runways. Outreach is the latest Seattle unicorn to slash positions; others including Karat, Icertis, Rad Power Bikes, Convoy, Qumulo, and Highspot have also conducted layoffs.

Medina told GeekWire earlier this month that Outreach sales have taken a hit due to the tech layoffs, as it operates on a per-user basis. However, the tighter spending climate has driven sales reps to rely more heavily on the startup’s tools for buyer qualification, offsetting some of that loss in demand, he added.

Outreach, launched in 2014, has more than 5,500 clients including Tableau, Okta and DocuSign. It became a so-called unicorn startup in 2019 when it raised $114 million. It raised two additional fundraising rounds in 2020 and 2021.

Outreach recently announced it is testing a new feature called Smart Email Assist, an AI tool powered by OpenAI’s GPT-3 model that spits out a draft email to a potential customer based on prior exchanges between the buyer and seller.

The startup is backed by Sands Capital, Salesforce Ventures, Operator Collective, Lone Pine Capital, Spark Capital, Meritech Capital Partners, Trinity Ventures, Mayfield, and Sapphire Ventures.

Outreach, ranked No. 3 on the GeekWire 200, has been gearing up for a public offering.

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