Commercetools — a “headless commerce” platform that provides APIs to companies building online storefronts — saw a major boost in its business just a few years ago, raising money at whopping $1.9 billion valuation as the world went shopping online in the wake of the Covid-19 pandemic, and businesses rushed to improve their e-commerce operations.
Today, the playbook looks a little different for e-commerce, and for Commercetools.
News has learned and confirmed that Commercetools has laid off dozens of employees over the last few weeks, including around 10% of staff earlier Wednesday, after failing to meet its sales growth targets. It’s also making a number of executive changes, including parting ways with its chief revenue officer and CFO, and reassigning the roles previously held by its chief information security and compliance officer.
“While we’ve made meaningful progress and our business continues to grow, over the last several quarters we haven’t fully achieved our aggressive revenue growth targets,” CEO Andrew Burton said in a memo to the company, which News has viewed. “That reality has required me, our executive team, and our Board to take a hard, in-depth look at where we fell short, where we showed strength, and what needs to change to build a stronger future.”
“Significant” restructuring will be carried out in marketing, sales, and internal operations such as HR and finance, according to the memo. Select staff in customer and product development will also be cut “after reviewing performance and impact.”
The full memo, shared by a source and confirmed as authentic by the company, is published below.
Burton, speaking to News after we contacted the company about the memo, said that around 10% of the company’s employees were affected today, but declined to give an exact number. A source, who spoke to News on condition of anonymity, said today’s layoffs total more than 70 people and, including the smaller layoffs of the last few weeks, make up to 20% of staff. Burton also added the company has 25-30 open roles it’s looking to fill.
It’s a difficult bump in the road for a company that appears to have had a strong run in the market. Originally founded in 2006 in Munich, Germany, Commercetools raised just $30 million in outside funding before it was acquired by retail giant REWE in 2015. By 2019, it was seeing its revenues growing at 110% annually, and so REWE spun it out as a startup again, backed with $145 million in funding from Insight Partners at a $300 million valuation.
After Covid-19 hit, Commercetools’ business boomed as shopping of all kinds went digital. Less than three years after the spin-out investment, it was able to raise $140 million at a $1.9 billion valuation led by Accel.
Through all of this, Commercetools’ founder Dirk Hörig led the company as CEO. He stepped away from the top position in July 2024, to be replaced by Burton. (Hörig has retained a seat on the board and is the company’s Chief Innovation Officer.)
At the time, the company was making “far beyond” $100 million in annual recurring revenue, and Burton’s arrival was seen as a precursor to the company going public, reportedly in 2025 or 2026. Burton declined to comment today on an IPO or other future plans.
The memo cites, at a high level, that Commercetools was missing its growth targets, but there have been other more specific shifts in the market.
While Commercetools was a very early mover in the space of “headless commerce” — a term first coined by Hörig — a number of competitors have emerged in more recent years. Chief among them is Shopify, which originally pitched itself to smaller merchants and has gradually grown into working with the same larger retailers that Commercetools targets.
E-commerce has continued to grow, but not at the breakneck pace seen between 2020 and 2022. The most recent U.S. Census Bureau figures noted that U.S. retail e-commerce grew just 2.7% from the third to the fourth quarter of 2024, totaling $308.9 billion and accounting for 16.4% of all retail sales. Earlier today, eBay noted that its Q4 sales grew just 1%.
Burton also cited question marks over how tariffs would play out as another factor impacting e-commerce companies, and the knock-on effect that has on suppliers like Commercetools.
“We had really ambitious goals that we had not reset to reflect the macro-economic uncertainty,” Burton told News today.
Finally, while brand-owned storefronts — a mainstay business for companies like Commercetools — continue to make up a giant part of the e-commerce market, they’re also competing against a new wave of marketplaces. Temu, Instagram, and TikTok all represent a new kind of social commerce that once again could change the game.
The ball’s in the court for companies like Commercetools to anticipate and build for wherever and however people may want to shop in the future.
Memo below:
Subject: Important Update
Hi team,
Over the past few years, we set ambitious goals, anticipating strong market growth. While we’ve made meaningful progress and our business continues to grow, over the last several quarters we haven’t fully achieved our aggressive revenue growth targets. That reality has required me, our executive team, and our Board to take a hard, in-depth look at where we fell short, where we showed strength, and what needs to change to build a stronger future.
As part of this, we made the difficult decision to restructure a few teams, implement targeted reductions in specific areas, and eliminate some roles. This decision is not a reflection on individual commercetoolers, their talent, dedication, or impact, but instead a necessary step to sharpen our focus and re-position commercetools to be in a stronger position to navigate and succeed in this turbulent market.
Many of you have built strong relationships with the colleagues who are leaving today. They have shaped commercetools in ways big and small, and we are truly grateful. We are providing all impacted employees with severance and continued benefits above the market standard. Additionally, we are continuing their access to OpenUp, our online platform offering diverse mental health support resources, to support them in this transition.
I know this is hard news to process. Change brings uncertainty, and we are committed to providing as much clarity, support, and direction as possible. To help answer common questions, we’ve put together an Employee FAQ that outlines key details about the restructuring, resources available, and what’s next.
To give everyone space to reflect, we are giving all employees this Friday, February 28th as a day off.
Your executive leader will meet with your department later today or tomorrow to discuss what this means for you and your team.
What’s Changing
C-level Updates:
- Bruno Teuber (CRO) – Transitioning out of the executive team, staying as an advisor until the end of H1. A new CRO search has started; in the interim, sales will report to me.
- Dan Murphy (CFO) – Transitioning out of the executive team, advising until the end of H1. CFO role will not be backfilled; Finance, Digital Solutions, and Legal will report to Matt Tuel (COO).
- Denis Werner (Chief Information Security & Compliance Officer) – Moving to a compliance-focused role under Dirk Hörig. IT Ops moving to Digital Solutions under Matt Tuel, Information Security moving to Product under Hajo Eichler, and Office Management moving to People under Roxana Dobrescu.
Teams with Significant Restructuring:
- Marketing (including BDRs) – Realignment to focus on enterprise GTM model and sales PODs.
- Sales & Operations – Restructuring to improve sales support and focus on top markets/customers.
- Enablement Functions (Finance, People, etc.) – Consolidating teams for better operational efficiency.
- Other Impacted Areas – Select cuts in Customer and Product Development after reviewing performance and impact.
Change is never easy, but it’s at the core of what we do — helping businesses adapt to new realities. Now, we’re doing the same. In our Company All Hands tomorrow, we will walk through these changes in more detail — the why, what, and how we move forward together — staying true to our belief in adapting boldly to build what’s next.
Andrew
