In a new corporate shake-off, Snap has laid off 20% of its staff. The company expects to save at least $500 million in costs annually with this move.
Snap Inc. CEO Evan Spiegel sent a memo on Wednesday telling employees and investors that Snap would be changing its focus to augmented reality and growing its community in an attempt to grow more revenue in the long term.
While we will continue our work to re-accelerate revenue growth, we must ensure Snap’s long term success in any environment. For planning purposes we have modeled a range of outcomes, some of which assume that low revenue growth continues into next year, and we have built our 2023 plan to generate free cash flow even in a low growth scenario. Projects that don’t directly contribute to these areas will be discontinued or receive substantially reduced investment. We have worked thoughtfully and deliberately to find the right balance between focusing our investments while continuing to innovate.
According to Spiegel, among the reasons for its ad business not doing so well in the second quarter, were due to events such as less market spending, the digital ad market squeeze and the Russian-Ukrainian war.
As part of the restructuring, Snap is canceling original shows after making extended content deals with Disney, ViacomCBS, and NBCUniversal earlier this year.
The company is also discontinuing the Pixy drone, which launched in April. Despite these failures, the company found success with its subscription service, Snapchat+. Snap reported it had over a million subscribers in the first six weeks the subscription was available.