CA Technologies will cut approximately 800 employees in the next year. In its fiscal Q4 2018 earnings call with investors today, CEO Mike Gregoire said that the job cuts will occur because the company is undergoing “cross-business unit, cross-functional organization alignment” as it shifts its business to a subscription-based model.
Part of this shift is driven by a site consolidation strategy “to move more of our people into our centers of excellence,” said Gregoire. “This migration of our teams into fewer, larger locations supports our agile methodology.” According the Gregoire, the company has embraced an “agile” model, where employees need to be present in the office to be effective, meaning a number of these migrations will come from satellite offices.
While he did not say exactly where the job cuts will occur, he noted that employees will be transitioned to align with necessary skills and experience. In the Q&A portion of the earnings call, CA Technologies executives said that as the company has gotten better at developing software, the employees with legacy skills will be replaced with people who have the “right skills.” In other words, those more aligned with Software-as-a-Service (SaaS) and other technologies that will move the company forward.
The cost savings from the staff cuts and reduced number of work sites will be used to invest in product development, customer service, and marketing. CA plans to increase its digital sales footprint by 70 percent.
Additionally, company executives said that the firm will hire 500 to 600 people with the correct skill sets, around 300 of which will be customer-facing positions.
While some of the company’s business is already on a subscription-based model, including its SaaS offerings, its full move to the model will primarily include its enterprise service offerings.
The company also said that Adam Elster, president of global field operations, will leave the company and that CA is currently searching for a replacement.
By The Numbers
CA Technologies reported fiscal fourth quarter 2018 revenues of $1.08 billion, a 7 percent increase year over year. Additionally, it reported total year revenue of $4.24 billion.
And it reported non-GAAP net income of $258 million, an increase of 14 percent compared to the same quarter last year, resulting in earnings per share of $2.59.
Its acquisitions within the last year of both Veracode and Automic contributed 5 points to the total revenue growth for the whole fiscal year 2018.
During the call, Gregoire said that the company’s SaaS business, and its enterprise solutions and mainframe business both grew. It also reported that new sales out-performed its renewal portfolio, while its renewal yield was over 90 percent.
CA Technologies mainframe sales grew 7 percent in the fourth quarter, which Gregoire attributed to its updated mainframe hardware cycle and “on-going innovation.”