Snap restructures; lays off 20 percent of its workforce

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Citing restructuring and plans to focus on its three priorities, Snap is laying off 20 percent of its workforce. The company is also cancelling its original shows, in-app games, and several other projects. All these are part of Snap’s plans to cut cost, and re-focus its business.

Company CEO Evan Spiegel in a memo as cited by The Verge, wrote that Snap is “restructuring our business to increase focus on our three strategic priorities: community growth, revenue growth, and augmented reality.”

Spiegel said Snap’s revenue growth had recovered to 8 percent from being flat in late July, which is short of saying things were beginning to get back on track. Of course, this is nothing compared to the 40 percent revenue growth it was recording prior to Russia’s invasion of Ukraine. Snap said it expects the layoff to safe it $500 million in costs every year.

Unfortunately, given our current lower rate of revenue growth, it has become clear that we must reduce our cost structure to avoid incurring significant ongoing losses,” Spiegel wrote in the memo as per The Verge. “While we have built substantial capital reserves, and have made extensive efforts to avoid reductions in the size of our team by reducing spend in other areas, we must now face the consequences of our lower revenue growth and adapt to the market environment.”

Snap’s decision will of course have its casualties; and we have already started seeing some of it.

Last month, Snap announced that its Pixy Drone will no longer be available. Snap’s decision to sunset the flying selfie camera just four months after it was launched is based on economic reasons.

Citing people familiar with the matter, Snap’s decision is based on the company’s plans to adjust plans during the economic downturn.

Speaking to staff during a regular question and answer session, Snap’s Chief Executive Evan Spiegel, the people said the plan to discontinue to the flying selfie camera is part of a wider reprioritization of its resources.

Snap, will however, continue to sell the current iteration of Pixy, a person familiar with the matter told WSJ.

There is no public data on the number of sales made within the last four months; so, it is a bit difficult to measure its market performance while production lasted.

Pixy is a camera drone that sits comfortably on the palm of your hand. Pixy is Snapchat’s first camera drone, and comes equipped with a camera that can capture 12MP images and video clips.

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Author: Ola Ric

Ola Ric is a professional tech writer. He has written and provided tons of published articles for professionals and private individuals. He is also a social commentator and analyst, with relevant experience in the use of social media services.

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