Personal finance startup NerdWallet seems to be on the struggle bus, having just laid off 53 people today (about 11 percent of its workforce) due to the fact that the company is not hitting its profitability goals, TechCrunch has learned. As part of the restructuring, NerdWallet's sales and partnerships teams will be folded into various product teams, a NerdWallet spokesperson told TC.
The layoffs are happening as a result of NerdWallet's revenue growth decreasing to market conditions. The company is missing its 2017 revenue projections, the company said. NerdWallet CEO Tim Chen sent an email to the staff this morning, notifying them of the layoffs.
"This was an incredibly difficult decision and not one we made lightly," Chen wrote. "Two factors drove this decision -- we’re not hitting our profitability goals, and there are areas within our organization that aren't running as efficiently as they should be."
In his email, Chen noted that while NerdWallet did grow this year, the company hit "some unexpected rough patches that impacted our revenue, which taught us an important lesson in budgeting more conservatively moving forward."
This is the third round of layoffs at NerdWallet this year. In July, NerdWallet laid off six people from its marketing team. In April, NerdWallet laid off more than 40 people, which represented eight percent of its staff. As part of the changes in April, NerdWallet VP of growth Henry Hsu left the company and NerdWallet COO Dan Yoo moved into an advisory role.
In July, Chen told me NerdWallet was still growing and was financially strong. He also said there were no more planned layoffs in the foreseeable future. Clearly, things changed.
"This is the right decision for NerdWallet, but it’s also extremely painful," Chen said in his email today. "We’re doing everything we can to support people during this transition and wish them the best."
NerdWallet has raised $69 million in funding, with its most recent round coming in May 2015 from Institutional Venture Partners.
Here's Chen's full email to staff:
I have some tough news to share today.
As part of the 2018 planning process, the leadership team spent a significant amount of time evaluating our needs for next year and has decided to make certain, necessary changes to set us up for long-term success. Sadly, this means we will be saying goodbye to 53 talented Nerds, who have all contributed meaningfully to building NerdWallet. This was an incredibly difficult decision and not one we made lightly.
Two factors drove this decision -- we’re not hitting our profitability goals, and there are areas within our organization that aren't running as efficiently as they should be.
Profitability: Every year since NerdWallet was founded in 2009, we’ve exceeded our aggressive revenue targets. We got used to exceeding our goals, and it colored our judgment on how prudent we needed to be with our expenses in 2017. Although we did grow this year, we hit some unexpected rough patches that impacted our revenue, which taught us an important lesson in budgeting more conservatively moving forward.
Operational Efficiency: Our focus on growth in recent years caused us to focus less on certain areas of our business that haven’t been running efficiently. We need to streamline certain functions, speed up others, and put certain processes and infrastructure in place to scale effectively.
Both profitability and operational efficiency are critically important to the success of this company. They allow us to control our own destiny, invest in initiatives with the highest impact, think long term, and most importantly, serve consumers well.
Today isn’t easy, but I’m confident we’re making the right investments as we enter 2018. Our transition to a mobile-first, member-driven company is well underway and something we know consumers want and need. These investments complement the brand and assets we’ve worked hard to build, help us better serve the 100 million people who come to us for help every year, and will propel our next phase of growth.
I want to thank everyone for their hard work, dedication, and commitment to our business. Difficult as they are, these changes move us toward a better operating model and set us up for long-term success. This is the right decision for NerdWallet, but it’s also extremely painful. We’re doing everything we can to support people during this transition and wish them the best.
- This article originally appeared on TechCrunch.