Snap to lay off 10% of staff amid revenue struggles
Snap Inc is letting go of nearly 10% of its workforce or around 500 employees. This layoff news comes after the company already reduced its staff by 20% in 2022 and 3% in 2023. The company is grappling with a tough digital advertising market, and is struggling to grow beyond its primary social media platform. Snap's revenue took a hit last quarter (a net loss of $368 million), and its Q4 2023 earnings report is now due.
Failed expansion attempts and market challenges
The company's augmented reality glasses never gained widespread popularity, and other hardware ventures like a selfie drone were quickly abandoned after their debut. The Snapchat Plus subscription service, and in-app features such as the TikTok-like Spotlight, haven't grown as quickly as hoped. Snap has also faced a shrinking advertisement market and difficulties navigating Apple's restrictions on user tracking for iOS devices.
Layoffs will "reduce hierarchy and promote in-person collaboration"
Describing the reason behind the layoffs, Snap spokesperson Farrin Jay said, "We are reorganizing our team to reduce hierarchy and promote in-person collaboration." "We are focused on supporting our departing team members and we are very grateful for their hard work and many contributions to Snap," he added. Snap announced the job cuts in a filing with the US Securities and Exchange Commission. They will be "subject to local law and consultation requirements" in each country where they take place.
Snap to spend up to $75 million on severance
Snap is yet to reveal which departments will be affected by the layoffs. However, the company has stated that the cuts are intended to "best position our business to execute on our highest priorities, and to ensure we have the capacity to invest incrementally to support our growth over time." Snap anticipates spending up to $75 million on severance and other related expenses.
Snap's ambitious targets for 2024
Snap's new layoff announcement comes at a time when CEO Evan Spiegel, has set ambitious goals for the current year. The firm wants to increase daily users by roughly 17%, boost advertising revenue by 20%, and double the number of Snapchat Plus subscribers, which currently stands at seven million. However, the company is burning through funds, while consistently missing its own internal targets.
Over 2 lakh tech jobs lost in 2023
The global tech industry is going through a rough phase. Layoffs.fyi, which tracks job cuts in this sector, claimed that over 232,000 people lost their jobs in the industry last year. Snap's peers like Meta and Google are trying to find a balance between cost-cutting steps and the need to remain competitive. To note, Google spent a mind-boggling $2.1 billion on layoffs and severance, for over 12,000 workers in 2023.
