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Snapchat maker Snap is the latest tech company to conduct layoffs with newly announced plans to cut 10% of its workforce, the company said Monday. The layoffs will affect about 500 employees, based on Snap headcount figures released in November 2023.
Layoffs announced An SEC filingSnap explained that the move was necessary to support its further growth.
“We have made the difficult decision to restructure our team to better position our business to execute on our highest priorities and to ensure our ability to invest more to support our growth over time,” the filing said. “As a result, we estimate we will incur pre-tax charges of $55 million to $75 million, primarily severance and related costs and other charges, of which $45 million to $55 million are expected to be future cash costs.”
While local legislation and other factors may extend some costs into Q2, Snap said most of those costs will occur in the first quarter of 2024. The company is scheduled to report its earnings after the market closes on February 6.
In a statement to TechCrunch, a Snap spokesperson said, “We're restructuring our team to reduce hierarchy and improve personal collaboration. We're focused on supporting our departing team members, and we're extremely grateful for their hard work and many contributions to Snap,” they added.
The company said at the time that the second wave of layoffs followed a small number of layoffs in months as Snap reorganized its product team late last year, focusing on reducing layers and speeding up decision-making. Snap's VP of engineering, Nima Khajehnouri, also left the product division with fewer than 20 people. Last September Snap shuttered its enterprise services division after less than a year in business. The company's investments in hardware products such as Snap Spectacles and its Pixie drone have not paid off.
In 2022, Snap cut 20% of its workforce amid a major restructuring.
Snap's stock price Jumped in early After reporting its Q3 earnings in October, it beat estimates of both earnings and revenue per share to $1.11 billion and a 4-cent loss of $1.19 billion and 2 cents. The company also topped user growth, reporting 406 million global daily active users, more than the expected 405.7 million. However, the company's net loss increased 2% year over year to $368 million in the quarter.
Although earned, snap Investors have been warned The ad market was volatile, noting that some of its clients' ad campaigns were on hold. According to research provider Insider Intelligence, the company has a 0.6% share of the global digital advertising market. The company estimates that Snap will generate $4.12 billion in global ad revenue by 2024.
“The layoffs don't bode well for the state of Snap's business beyond its Q4 2023 earnings,” said principal analyst Jasmine Enberg. “Meta's blockbuster reporting is a tough act for Snap to follow, and Snap is trying to win some goodwill with investors, who have rewarded its rival for its cost-cutting measures and continued its “do less” mantra through 2024. We expect Snap to report a 3.3% decline in ad revenue for 2023. to be expected,” Enberg added.
As of Q3, Snap has 5,367 employees Q3 press release.
Business Insider reported Snap's layoffs Several dozen employees were let go Friday ahead of a company-wide announcement. More job cuts are expected this week, the report said.