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Duck Creek Technologies (Boston) has reduced its workforce by nine percent, according to statements issued to employees, customers and Insurance Innovation Reporter yesterday.
“Following careful analysis and deliberation with Duck Creek’s leadership team and taking into full consideration every possible cost-savings option, we have made the extremely difficult but necessary decision to implement a reduction in force,” said Mike Jackowski, the company’s CEO, in a statement to IIR. “This action directly impacts nine percent of our workforce and will affect all business locations, functional areas, and levels of the company. Given the current macroeconomic environment, we deemed this to be a necessary step for Duck Creek’s long-term growth and success.”
The announcement follows Duck Creek’s return to private company status, after having been acquired by Vista Equity Partners (Austin, Texas) for $19.00 per share, in an all-cash transaction valued at approximately $2.6 billion, announced in Jan. 2023 and closed by March.
In a Jan. 20 story in IIR, Ellen Carney, Principal Analyst, Forrester Research (Cambridge, Mass.) noted that, while Duck Creek had no debt and had advantages with regard to cash and short term investments, according to information published at the end of fiscal year 2020, it had also faced challenges since its August 2020 IPO, after which its stock price rose to $42 from $27.
“The bigger problem is Duck Creek’s operational expenses, which have driven consistent losses for the firm, Carney told IIR in January. “Its G&A expenses were more than $67 million or 37 percent of total expenses, and considerably higher than sales and marketing and R&D spend.”
In an exchange on the news of layoffs, Carney speculated that Vista Equity Partners was finally getting around to imposing measures to address operating expenses. “Frankly, I was surprised that this didn’t happen earlier in the year, but wouldn’t be surprised if the Vista folks sent in boots on the ground to look at Duck Creek’s operations,” she told IIR.
Proactive Measure to Ensure Long-Term Sustainability
Karlyn Carnahan, head of Celent’s (Boston) North American insurance practice, noted that Duck Creek had experienced rising operating expenses and declining net income in a way experienced by many companies across the tech industry. Carnahan interprets the restructuring effort as a proactive measure taken by the company to address its financial situation and ensure long-term sustainability.
“Duck Creek’s announcement of workforce layoffs was undoubtedly a difficult decision,” Carnahan says. “In the face of evolving market dynamics, companies often need to make tough choices to realign their resources and improve financial health. By streamlining operations and aligning resources, they are laying the foundation for a more sustainable and agile business model. We remain optimistic that Duck Creek will emerge as a leaner, stronger, and more resilient organization and will continue to make significant contributions to the tech ecosystem.”