Israeli-Singapore retail analytics company Trax will begin laying off over 100 employees in the coming few days,12% of its work force, in efforts to become profitable more quickly than previously planned. Several dozen employees in Israel are expected to lose their jobs.
Trax provides marketing chains with technology based on computer vision and robots, which help prevent shortages in deliveries. The company's system provides alerts when inventory of a product is running low so that shelves can be refilled and orders for deliveries fulfilled. Trax is being hit by a shrinking in the retail food delivery business that has effected other companies like food delivery company Avo, which has shut down its Israel operations.
Trax cofounder and executive chairman Joel Bar-El says, "We have enough money in our coffers. It allows us freedom to work and the ability to plan our future in the best way. Our streamlining measures are not borne out of a lack of cash but the desire to make the company profitable more quickly than we planned out of recognition that on the day we can hold an IPO, the criteria for profitability will be very important for investors. The measures have no relation to the funds that we have raised."
In April 2021, Trax raised $640 million led by SoftBank's Vision Fund 2 and BlackRock at a company valuation of $2.6 billion. $300 million was used for investment and the rest was used to buy stakes from existing shareholders in a secondary deal. The company has raised $975 million to date.
Bar-El adds, "Following the situation in global markets which have experienced dramatic declines in multiples, and due to our estimation that it will be difficult to raise additional capital in the next 18 months to two years, we have decided to embark on this process. We decided to reduce less profitable products lines. It is important to stress that salaries have not been hit nor conditions of the employees. We will take care of the employees that are leaving us and pay them higher compensation than required according to their number of years with us and seniority, as well as help in finding new jobs."
Would you still have raised at a valuation of $2.6 billion last year if you'd have no the situation you would now be in?
Absolutely. It reflects our value. We have also been in continual dialogue with global investors and we even recently received an offer of investment at a similar valuation. If we were a public company then maybe our price would have been badly hit. But as a private company we can choose investors that are ready to pay for an investment that they believe in."
You are operating in the retail market, and indirectly in the e-commerce sector, which has been hit hard in recent months. Do you see this change in demand?
"We are growing 40% year-on-year, and this year too we will continue to grow. Despite the streamlining aimed at non-profitable products, we will continue to hire workers for other streams."
This is not the first round of layoffs by Trax, which has 950 employees. In January 2021, the company laid off over 30 employees in Israel and in May 2020, 100 employees worldwide. Some of the layoffs followed acquisitions, which included US company Shopkick and French company Qopius.
Published by Globes, Israel business news - en.globes.co.il - on June 20, 2022.
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