8% of Workforce Axed Weeks After Francisco Partners Named Citrix’s Joe Kim as CEO
Sumo Logic has axed 8% of its workforce less than a month after Francisco Partners paid $1.7 billion to take the data analytics vendor private.
The company told California’s Employment Development Department on June 7 that it would lay off 79 staff at its Silicon Valley headquarters the following day. Sumo Logic employed 983 people across 16 countries as of Jan. 31, meaning the cuts at headquarters affected just over 8% of its staff. The private equity firm followed the same playbook of steep layoffs after buying platform vendor Forcepoint for $1.1 billion in early 2021.
It’s unclear if Sumo Logic also laid off workers at its offices in Denver; Austin, Texas; and Raleigh, North Carolina – or those in Poland, Italy, India and Japan. The company declined to tell Information Security Media Group how many workers were affected globally. Nearly three-quarters of Sumo Logic’s workforce is located in the United States, and 18% are based in India. The remaining 8% are in the U.K., Australia, Canada and Germany, IT-Harvest found.
The private equity firm closed its acquisition of Sumo Logic on May 12 and three days later tapped former Citrix Chief Technology and Product Officer Joe Kim to replace Ramin Sayar, who had led the company since 2014. Francisco pulled a similar move at Forcepoint in January 2021, when it tapped former F5 CEO Manny Rivelo to replace Matt Moynahan, who now leads identity verification provider OneSpan (see: PE Firm Francisco Partners to Purchase Sumo Logic for $1.7B).
How Sumo Logic Fared Prior to Francisco’s Ownership
Sumo Logic’s revenue climbed to $300.7 million during the fiscal year ended Jan. 31, 2023, up 24.2% from $242.1 million a year earlier. At the same time, however, the company’s net loss increased to $124.8 million – 1.2% worse than a net loss of $123.4 million the year prior. Sumo Logic raised $325.6 million on a market cap of $2.2 billion during the company’s September 2020 initial public offering.
Sumo Logic carried out two deals during its time as a public company. It bought SOAR provider DFLabs for $41.7 million in March 2021 to accelerate threat detection, analysis, incident response and forensic investigations, and it acquired open-source monitoring provider Sensu for $32.7 million in June 2021 to give customers an affordable, extensible and scalable tool for infrastructure and application monitoring (see: What Makes Sumo Logic an Appealing Target for Private Equity).
“What we’ve done is cloudify what they [DFLabs] have productized and integrate it to the No. 1 logging platform and our SIEM product to help both enterprise customers – as well as MSPs that they serve – accelerate their journey to automation, and analytics,” Sayar, Sumo Logic’s former president and CEO, told ISMG in September 2022.
The company’s technology is well regarded by industry analysts. Gartner in October 2022 named Sumo Logic a visionary in the SIEM market behind category leaders Microsoft, IBM, Splunk, Securonix and Exabeam. Then, in December 2022, Forrester recognized Sumo Logic as a strong performer in security analytics behind category leaders Elastic, Splunk and Microsoft (see: Sumo Logic CEO on Using Data to Improve Security Posture).
“Customers realize they’re able to have a confident approach with Sumo of how to get from where they are today to where they need to be,” Sayar told ISMG in September. “They may leave the old SIEM for the legacy environment and bring in Sumo to address their new environment. Gradually, as they migrate data, infrastructure, apps and users, then they’re already covered. We typically win because of that.”
Will Francisco Follow Forcepoint’s Playbook for Sumo Logic?
After naming Rivelo Forcepoint’s new leader, Francisco carried out significant layoffs, and its headcount dropped more than 13% from 2,590 employees in January 2021, to 2,258 workers nine months later, according to IT-Harvest. Both Rivelo and Kim spent many months as senior operating partners at Francisco before being installed as the top executives at Forcepoint and Sumo Logic, respectively.
Following the CEO appointment and heavy layoffs, Forcepoint turned its attention to M&A, purchasing remote browser isolation vendor Cyberinc, threat removal firm Deep Secure and cloud access security broker Bitglass over the course of 2021. The moves paid dividends: Forrester named Forcepoint as a leader in data security, and Gartner named Forcepoint as a visionary in security service edge in April.
Then in July 2022, Francisco sold its stake in SMB security stalwart WatchGuard Technology to Vector Capital – which became majority owner – in a transaction valued at $1.5 billion. Since 2016, Francisco Partners has owned platform security firm SonicWall alongside activist hedge fund Elliott Management, though the two were rumored to be preparing to sell SonicWall in June 2021, PE Hub reported.
Sumo Logic is the fourth cyber company to lay employees off this month. SentinelOne cut 105 workers after a massive drop in data usage for products with consumption-based pricing. Dragos last week axed 50 workers after experiencing longer sales cycles and smaller initial deployment sizes. And Expel late last week laid off 60 workers just eight months after hauling in $31 million to provide a financial cushion.