Immutable, the Australia-based crypto gaming giant, which raised $280 million in a funding round that valued the company at $3.5 billion last year, has shocked the industry with an announcement of an 11% staff layoff on Wednesday morning. In a note to employees from co-founder and CEO James Ferguson, Immutable cited the need to optimize the longevity of their cash reserves and focus resources on their most critical initiatives.
Immutable’s financial figures revealed in their filing with the Australian Securities and Investments Commission for the past financial year help explain the job losses. The company reported a revenue of $27 million yet had employee, consultant, and freelancer expenses totaling $45 million.
This resulted in an estimated annual loss of $56 million. However, Immutable marked up the value of their cryptocurrency and token holdings related to their games and projects by $558 million.
Immutable blames difficult economic climate for staff layoffs
CEO Ferguson expressed his grief in response to the announcement: “This is difficult news, and I am sorry to all Immutables impacted by these changes. As CEO, I take full responsibility for these actions and their impact on the lives of our people.”
He continued to state that the financial losses were not due to a lack of effort from any staff member but necessary to keep the company afloat, as it is a difficult economic climate for many businesses.
The staff layoffs have left the gaming giant in a difficult position as they attempt to regain their footing in the market and support those affected by these changes. Immutable’s future is uncertain, yet the company remains dedicated to providing quality entertainment and products to its customers.
A spokesperson for the company noted that with $280 million in cash on its balance sheet and its current spending rate, it held more than four years of cash reserves. Additionally, Immutable had reduced hiring plans and conducted an in-depth assessment of its contractor budgets to focus resources on high-priority areas. This news comes after numerous other Australian start-ups have made similar staff cuts over the past year, such as Milkrun and Linktree.
The crypto industry has been battered over the last year as investors concerned about rising interest rates turn away from speculative investments after a series of unrelated high-profile collapses, including the FTX exchange and the Terra/Luna cryptocurrency project. Through its strategic budget adjustments, Immutable hopes to remain a key player in the crypto gaming industry for years.
Focus on Web3 gaming and NFTs
Immutable, founded in 2018 and headquartered in Sydney, has experienced rapid growth in recent years, offering highly competitive pay packages to its staff.
CEO James Ferguson stated that those affected would be offered ten weeks’ redundancy pay on average, above the statutory amount; more company shares than required; laptops; and counseling, coaching, and outplacement services. For staff in the US, company-provided healthcare will also be extended.
Despite the job losses, Ferguson maintained conviction in Immutable’s vision to dominate Web3 gaming and focus on other crypto components. Zebediah Rice, a partner at King River Capital and board observer for the company, supported the action by stating, “The disciplined companies of today will be those best positioned to capture the next decade of value.”