Automattic — parent of WordPress, Tumblr, and WooCommerce — has announced a reduction of around 16% of its workforce. The company says it is taking this decision to protect its long-term survival amid an AI onslaught that has particularly affected software companies. This move decreases the employee count from 1,777 to 1,495, affecting about 280 individuals .
Interestingly, despite ongoing revenue growth, CEO Matt Mullenweg highlighted that increasing competition and rapid technological changes necessitate a stronger focus on productivity, profitability, and strategic investment.
“We have reached an important crossroads. While our revenue continues to grow, Automattic operates in a highly competitive market, and technology is evolving at unprecedented levels. To support our customers and products, we must improve our productivity, profitability, and capacity to invest,” Matt Mullenweg said in his statement.
The move follows a rough period marked by legal disputes with WP Engine (a third-party hosting company). WP Engine filed a lawsuit against Automattic and CEO Matt Mullenweg, alleging unfair practices concerning the Advanced Custom Fields (ACF) plugin. Actually, the conflict started when Automattic’s CEO, Matt Mullenweg criticized WP Engine for insufficient contributions to the WordPress open-source project, leading to the lawsuit.
In response, Automattic reduced its contributions to the WordPress core project to match WP Engine’s involvement, cutting weekly contribution hours from 3,988 to 45 (~ 99% reduction). At the same time, Mullenweg acknowledged that the lawsuit could have significant financial implications, potentially risking the future of WordPress.org.
In fact, this legal tension has also provoked internal restructuring. Notably, in October 2024, Mullenweg offered voluntary buyouts (either $30,000 or six months’ salary) to employees disagreeing with his viewpoint on the WP Engine dispute. This resulted in the departure of 159 employees, around 8.4% of Automattic’s workforce at that time.
Along with such legal troubles, the company also facing tough competition in the content management and e-commerce sectors. And in response to the same, Automattic has undertaken several initiatives like AI adoption. Last year in July, the company launched an AI writing assistant designed to help bloggers create more readable and concise content, aiming to enhance user experience on WordPress platforms. In fact, Automattic acquired an AI startup WPAI (known for products like CodeWP and AgentWP) to integrate advanced AI solutions into the WordPress ecosystem.
Additionally, in December 2024, the company also introduced an affiliate program to expand its reach and incentivize partnerships. It enables creators, developers, agencies, and small businesses to earn by promoting Automattic’s products and services.
Talking about financials, Automattic reported revenues of around $710 million in 2024, marking an 11.2% increase from the previous year. Back in 2021, the company secured $288 million in funding at a valuation of $7.5 billion. However, in late 2024, BlackRock (one of its investors) marked down its investment by 10%, suggesting a potential decrease in the company’s valuation.
Content originally published on The Tech Media – Global technology news, latest gadget news and breaking tech news.
