Snap is canceling several projects and laying off 20 percent of employees
Snap is laying off around 20 percent of its more than 6,400 employees and canceling its original shows, in-app games, and several other projects as part of a corporate restructuring.
In a company memo on Wednesday that you can read in full below, CEO Evan Spiegel wrote that Snap is “restructuring our business to increase focus on our three strategic priorities: community growth, revenue growth, and augmented reality.”
Spiegel said the company’s revenue growth had reaccelerated to 8 percent from being flat in late July, suggesting its ads business is starting to rebound. Still, that is a far cry from the more than 40 percent revenue growth Snap was seeing before Russia invaded Ukraine, which it blamed for a slowdown in marketing spend, and a broader contraction in the digital ads market that started earlier this year. In a filing with the SEC, Snap said it expects the layoffs, which were first reported by The Verge on Tuesday, to save it $500 million in costs annually.
“Unfortunately, given our current lower rate of revenue growth, it has become clear that we must reduce our cost structure to avoid incurring significant ongoing losses,” Spiegel wrote in the memo. “While we have built substantial capital reserves, and have made extensive efforts to avoid reductions in the size of our team by reducing spend in other areas, we must now face the consequences of our lower revenue growth and adapt to the market environment.”
Spiegel said that Snap would end its original shows that appear in the Discover section of Snapchat, along with 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. Spiegel said the company is also “winding down” Zenly, a separate app for seeing where your friends are on a map that was acquired in 2017, and Voisey, a TikTok-like music app that Snap bought in 2020.
Since at least 2017, Snap has invested in original, vertically shot shows for its Discover section. Just earlier this year, the company announced a slate of new shows featuring celebrities like Olympic gymnast Simone Biles and the social media star Charli D’Amelio. In its last earnings report, Snap bragged that 10 million Snapchat users had watched The Fight Inside, a new Snap show featuring the professional boxer Ryan Garcia.
The company’s platform for mini apps and games from outsider developers first debuted in 2020 as a way for users to do things like book concert tickets with friends without leaving Snapchat. But the platform has remained relatively buried inside Snapchat and hasn’t contributed meaningfully to Snap’s ads business.
Snap’s leadership team is also being shaken up this week: Spiegel announced that Jerry Hunter, the company’s engineering chief, will become chief operating officer overseeing all monetization, growth, partnerships, and engineering. Snap’s chief business officer and top ads exec, Jeremi Gorman, announced Tuesday that she was leaving to run Netflix’s forthcoming ad-supported tier.