Snap, the parent company of Snapchat, is set to undergo another round of workforce reductions, this time amounting to 10% of its employees, due to a recent decline in revenue. This move follows a broader trend in the tech industry, which witnessed a staggering 232,000 job cuts in 2023, with expectations of more layoffs in 2024.
The impending layoffs come on the heels of Snap’s previous significant staff reductions, including a 10% cut in the global full-time workforce last year, a 20% reduction in 2022, and a 3% reduction in 2023. At the beginning of 2023, Snap had around 5,300 employees. Despite not specifying the affected departments, Snap emphasized the importance of these job cuts in aligning the company with its top priorities and ensuring the capacity for incremental investments to support future growth.
The impacted employees will receive notifications soon, and Snap is estimated to spend approximately $75 million on severance and related costs for the layoffs. Notably, Snap has been grappling with revenue declines for two consecutive quarters, and challenges persist in various products and services, including unsuccessful ventures like Snapchat AR glasses, selfie drones, Spotlight, and the Snapchat Subscription service.
Despite these challenges, Snap’s CEO Evan Spiegel envisions a bold future for 2024, with plans to grow daily users by 17%, increase ad revenue by 20%, and double Snapchat Plus subscribers from the current 7 million. However, the company has struggled to meet its own goals and has been operating at a loss.
Snap spokesperson Farrin Jay highlighted the restructuring as an effort to foster more collaboration and reduce hierarchy within the team. The company remains committed to supporting departing team members and acknowledges their hard work and contributions.
This wave of layoffs aligns with broader industry trends, as major tech companies like Meta and Google also grapple with the delicate balance between implementing cost-cutting measures and maintaining competitiveness. According to data from layoffs.fyi, which monitors job reductions in the tech sector, over 232,000 job cuts occurred in the industry in 2023, with more than 30,000 employees laid off in January 2024, signaling potential further cuts in the coming months.