Splunk Cuts 7 Percent Of Staff, ‘Not A Result’ Of Cisco Deal, CEO Says

In a letter to employees, Splunk CEO Gary Steele blamed the new round of layoffs on market conditions that have ‘retracted.’

Splunk disclosed layoffs impacting 7 percent of staff amid its plans to be acquired by Cisco Systems for $28 billion.

The cuts affect U.S.-based employees as well as workers in the Americas, the company said. The new round of job cuts will impact an estimated 537 employees at San Francisco-based Splunk.

[Related: Cisco-Splunk Will Face Huge Challenge Vs. Palo Alto Networks: Analysis]

While Splunk did not disclose the total number of impacted employees, the estimate is based on the company’s head count of 7,675 as of Feb. 1, after a prior round of layoffs that impacted 325 workers at Splunk.

The CEO of the cybersecurity and observability vendor said the cuts are not related to Cisco’s pending acquisition of the company.

“The changes we are announcing are not a result of our agreement with Cisco,” Splunk CEO Gary Steele wrote in a letter to employees Wednesday, which was included in a filing with the U.S. Securities and Exchange Commission.

Instead, the layoffs are “the continuation of the important initiatives we’ve undertaken across Splunk for more than a year to align our resources and operating structure,” Steele said in the letter.

In February, Splunk announced it was laying off about 4 percent of its workforce, or 325 employees, primarily in North America.

In the letter to employees dated Nov. 1, Steele also attributed the latest cutbacks to “overall market” conditions, which he said have “retracted.”

“We expect the macro environment will continue to be unpredictable for the foreseeable future,” he added.

The layoffs come about five weeks after Cisco announced its $28 billion agreement to acquire Splunk, driven in large part by Splunk’s strong position in key cybersecurity segments including SIEM (security information and event management). It’s by far the largest acquisition deal in the networking giant’s nearly four decades in business, as well as one of largest software M&A deals ever.

Cisco has been working aggressively to build out what it calls its “Security Cloud,” a unified platform for modern security spanning a number of pivotal areas of cyber defense.

Partners have applauded the Cisco-Splunk deal, saying it should open up major new cybersecurity opportunities for the channel. Cisco is expected to combine Splunk’s SIEM technology—used by security teams to monitor for signs of a cyberattack—with the recently unveiled Cisco XDR platform, which would be a powerful combination, partners said.

Splunk is also a major provider of data analytics and IT observability technologies.

Cisco’s acquisition of Splunk is expected to be completed by the end of September 2024.