Snap CEO Evan Spiegel has informed employees the company will be laying off approximately 20% of its staff.
Like many companies, Snap is experiencing slower growth than expected as a result of the economic downturn.
The investments we have made in our business to-date assumed a higher rate of revenue growth based on our vast opportunity and our proven history of execution, including 2x growth in the size of the Snapchat community and 10x growth in trailing twelve month revenue since our IPO in 2017.
Despite the company’s best efforts to insulate itself, Spiegel says it must cut costs to avoid significant losses.
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. 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.
Spiegel says the company will restructure to focus three strategic priorities, including community growth, revenue growth, and augmented reality. As part of this restructuring, the company will shed roughly 20% of its workforce across nearly all teams. Spiegel hopes this will be the only layoff necessary.
As a result, we have made the difficult decision to reduce the size of our team by approximately 20%. The scale of these changes vary from team to team, depending upon the level of prioritization and investment needed to execute against our strategic priorities. The extent of this reduction should substantially reduce the risk of ever having to do this again, while balancing our desire to invest in our long term future and reaccelerate our revenue growth. Overall, the size of our team will remain larger than it was at this time last year.