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Social and video giant Snap (SNAP, $10.88) is laying off around 20% of its more than 6,400 employees and cancelling its original shows, in-app games, and several other projects as part of a corporate restructuring. The layoffs will see more than 1,200 employees cut, with the company expecting to save about $500 million.
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In a memo sent around the company, CEO Evan Spiegal explained that as a result of slower growth Snap was restructuring with a focus on what he called the company's three strategic priorities of growing its community, growing revenue, and augmented reality. Spiegel said the company’s revenue growth had reaccelerated to 8% from being flat in late July.
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The company’s Snap Originals content push will be scrapped, and instead content from creators and partners will be prioritized. Also being done away with, is its in-app games and HTML miniature applications built by outside developers. The company’s self-flying camera drone, Pixy, is being canned after debuting in only April.
Why it matters
Snap, which said it employed 6,446 full-time staffers in its Q2 earnings report, has been particularly impacted by declining ad revenue, supply chain delays, Apple’s iOS privacy changes and the ongoing war in Ukraine. In May, ahead of its Q2 earnings, the company disclosed it would not meet the low end of its revenue and Adjusted EBITDA guidance because “the macroeconomic environment has deteriorated further and faster than anticipated.”
