Commercetools, a “headless commerce” platform offering APIs to companies building online storefronts, saw significant growth a few years ago. The company raised funds at a $1.9 billion valuation as e-commerce surged following the COVID-19 pandemic, with businesses eager to enhance their online operations.

However, the landscape for e-commerce and for Commercetools has shifted, and the company is now facing challenges.

TechCrunch has confirmed that Commercetools recently laid off dozens of employees, including around 10% of its workforce on Wednesday, due to missing its sales growth targets. The company is also making changes to its executive team, including parting ways with its chief revenue officer (CRO) and CFO, as well as reassigning the roles of its chief information security and compliance officer.

In a memo to employees, CEO Andrew Burton acknowledged the challenges, stating, “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.” He added that the company’s executive team and board had conducted a thorough review to identify areas of strength and weakness and to determine what changes were necessary for a stronger future.

Burton also noted that “significant” restructuring would take place in marketing, sales, and internal operations, including HR and finance. Cuts would also be made in customer and product development after assessing performance and impact.

The memo, which was verified by TechCrunch, outlined the changes in detail. After TechCrunch reached out to Commercetools, Burton confirmed that around 10% of the company’s staff was affected by the layoffs but declined to provide an exact number. A source familiar with the situation told TechCrunch that the layoffs on Wednesday affected more than 70 employees, with a total of up to 20% of the company’s workforce impacted by layoffs over the last few weeks. Burton also mentioned that the company currently has 25-30 open roles to fill.

This marks a challenging turn for a company that has seen remarkable success. Founded in 2006 in Munich, Germany, Commercetools raised only $30 million in funding before being acquired by retail giant REWE in 2015. By 2019, the company was growing at a rate of 110% annually, prompting REWE to spin it off as a standalone startup with $145 million in funding at a $300 million valuation. Following the COVID-19 pandemic, Commercetools experienced a major boost, raising $140 million at a $1.9 billion valuation in less than three years.

Commercetools’ founder, Dirk Hoerig, led the company through these early years of growth, stepping down as CEO in July 2024. He was replaced by Burton, who took over as the company’s new CEO. Hoerig continues to serve on the board and as the chief innovation officer. At the time, Commercetools was generating more than $100 million in annual recurring revenue, and Burton’s appointment was viewed as positioning the company for an eventual public offering, likely in 2025 or 2026. Burton declined to comment on any plans regarding an IPO.

The company’s struggles to meet growth targets can be attributed to a number of factors, including increased competition. While Commercetools was an early pioneer in the “headless commerce” space—coined by Hoerig—new competitors, particularly Shopify, have emerged. Shopify, once focused on smaller merchants, has expanded its offerings to cater to larger retailers, which were previously Commercetools’ target market.

E-commerce growth has slowed in recent years, with the latest figures from the U.S. Census Bureau showing just a 2.7% growth from Q3 to Q4 of 2024. Other companies, such as eBay, have seen minimal growth, with Q4 sales up by only 1%. Burton also pointed to macroeconomic uncertainties, including potential tariff impacts on e-commerce, as factors affecting growth. He added, “We had really ambitious goals that we had not reset to reflect the macroeconomic uncertainty.”

Additionally, Commercetools faces new competition from marketplaces such as Temu, Instagram, and TikTok, which represent a new wave of social commerce, further complicating the e-commerce landscape.

In a fast-evolving market, Commercetools and other companies in the space must adapt to new shopping behaviors and emerging platforms to remain competitive.

Memo Excerpt:

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. This reality has required us 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 succeed in this turbulent market.

Many of you have built strong relationships with colleagues who are leaving today. They have contributed to commercetools in ways both big and small, and we are truly grateful for their efforts. We are providing all impacted employees with severance and benefits above the market standard, and continuing their access to OpenUp, our mental health support platform, during this transition.

I know this is difficult news. Change brings uncertainty, but 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 and what’s next.

We are giving everyone the day off on Friday, February 28, to reflect. Your executive leader will meet with your department later today or tomorrow to discuss the changes and their impact.

What’s Changing:

C-Level Updates:

  • Bruno Teuber (CRO): Transitioning out of the executive team but staying on as an advisor until the end of H1. Sales will report to me in the interim while we search for a new CRO.
  • Dan Murphy (CFO): Transitioning out of the executive team but advising until the end of H1. The 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 Hoerig. IT Ops will move to Digital Solutions under Matt Tuel, Information Security will move to Product under Hajo Eichler, and Office Management will move to People under Roxana Dobrescu.

Teams with Significant Restructuring:

  • Marketing (including BDRs): Realignment to focus on the enterprise GTM model and sales PODs.
  • Sales & Operations: Restructuring to improve sales support and focus on top markets and 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 at the core of what we do, helping businesses adapt to new realities. Now, we’re doing the same. We will go through these changes in more detail in our Company All Hands tomorrow, and we’re committed to moving forward together as we stay true to our belief in adapting boldly to build what’s next.