The Snapchat logo displayed on a phone screen is seen with a laptop in the background in this illustration photo taken in Krakow, Poland, August 10, 2022.
Jakub Porzycki | Nurphoto | Getty Images
Snap confirmed it would be cutting 20% of its workforce of more than 6,000 people and said it would be scrapping several projects, including its Pixy photo-taking drone and its line of premium Snap Originals shows.
Evan Spiegel, CEO of Snap, announced the changes in a memo on Tuesday and told employees the company needed to restructure its business to deal with its financial challenges. He said the company’s current year-over-year revenue growth rate for the quarter of 8% “is well below what we expected earlier this year.”
“While we have built up significant capital reserves and have made considerable efforts to avoid reductions in the size of our team by reducing expenses in other areas, we must now deal with the consequences of the weak our revenue growth and adapt to the market environment,” said Spiegel. said. “We are restructuring our business to focus more on our three strategic priorities: community growth, revenue growth and augmented reality.”
Other projects the company has destroyed include its third-party apps Snap Minis and Snap Games. Spiegel said Snap was also beginning the “liquidation process” for its Zenly card product and its Voisey music feature, both of which were inherited through acquisitions.
Snap also promoted Jerry Hunter from senior vice president of engineering to chief operating officer. Hunter will continue to lead Snap’s engineering unit, Spiegel said.
The company said it has hired Ronan Harris, Google’s vice president and general manager for the UK and Ireland, to be its president of the Europe, Middle East and Africa region, a new position. Harris will join Snap’s leadership team.
Spiegel said Snap is currently looking for presidents for the company’s Asia Pacific and Americas regions, as well as two new roles.
“Changes of this magnitude are never easy, and we must act decisively to face this moment as a team,” Spiegel said. “I am proud of the strength and resilience of our team as we overcame the myriad challenges of growing our business in a highly competitive industry during uncertain and unprecedented times.”
In July, Snap shares cratered more than 25% after the company reported second-quarter results that lacked both top and bottom and said it would not provide guidance for its quarter. In progress.
The company said at the time that it planned to “significantly” slow its hiring rate and the growth rate of its operating expenses.
Like other social media companies, including Facebook parent Meta, Pinterest and Twitter, Snap said a confluence of factors had simultaneously hurt the company’s business. They include a weakened macroeconomic environment and Apple’s iOS 2021 update, which made it harder for social media companies to track users on behalf of third-party advertisers.
The rise of TikTok’s short-video service has also posed a significant challenge to Snap and its competitors.
Snap said it was abandoning development of its Pixy drone after reports surfaced that the company was suspending work on the device. The drone was meant to be a fun way for users to take photos of themselves from multiple angles. Snap tried to build a consumer hardware business and announced the $230 drone in April.
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