The restructuring includes an involuntary reduction in workforce affecting nearly 120 employees, constituting approximately 20% of the company’s global personnel.
This latest move comes on the heels of a previous restructuring initiative in August 2022, during which Hippo undertook a workforce reduction of 10%.
The affected employees received notifications of the impending workforce reduction on October 26, 2023, with the majority of job eliminations slated to be effective on November 1, 2023.
Hippo Holdings disclosed that it foresees incurring charges ranging from approximately $2.2 million to $2.7 million in the fourth quarter of 2023. These charges encompass severance, benefits, and other associated costs resulting from the workforce reductions, with a significant portion expected to translate into cash expenditures during the same period.
The company is actively assessing the potential broader impacts of this reduction, including considerations for facility lease exits and other expenses tied to employees. Currently, it remains challenging to estimate any additional restructuring costs or charges associated with these organizational changes.
Speaking about the move, KBW analysts stated:“Broadly, we think expense reductions like this are necessary for HIPO to stay on its path toward positive AEBITDA exiting 2024 and ultimately positive AEBITDA for full-year 2025. To the extent management reiterates its commitment to those objectives with 3Q earnings next week, that should be well-received by the market, especially given the stock’s recent weakness.”
Author: Joanna England
