Key Highlight
- Snap lays off 20 percent of its workforce
- It has roughly 6,400 employees
- Snap was appointing Jerry Hunter as COO
The maker of the ephemeral messaging app Snapchat, Snap, announced that it will be laying off 20 percent of its workforce, ceasing production of at least six products. In addition to this, the social media giant is recruiting its first chief operating officer (COO) in seven years.
Nearly 1,300 of Snap’s 6,400 employees are expected to be affected, the company said. The segment of Snap that created exclusive short shows with famous people and other influencers, as well as its social mapping app Zenly, its music creation app Voisey, and hardware like its Pixy drone camera, are all being shut down.
The company claimed its most recent quarter’s revenue growth of 8 percent was “well below” projections and that the cuts were part of a worst-case plan for how the sluggish advertising market will continue to affect it in the coming year.
The company known as Snap has been particularly hard struck by Apple’s crackdown on ad tracking across apps, just like Facebook, which has also made personnel reductions.
Evan Spiegel, the CEO of Snap, told his team that the company had anticipated a ten-fold increase in revenue and a doubling of its social media following, but that neither had happened.
According to a note to investors from Snap, the company will save $500 million in annualized cash costs compared to the April-June quarter as a result of the layoffs, project cancellations, and another restructuring (for which Snap posted lackluster earnings results). The amount reflects a $50 million decrease in content expenses.
The restructuring costs will be around $110 million to $175 million. Approximately $95 million to $135 million of that will be expected to be acquired in adjusted operating expenses, mostly in the current quarter.
At the same time, Jerry Hunter, a senior vice president for engineering, was appointed chief operating officer by Snap. Mr. Hunter will succeed Snap’s CEO and co-founder Evan Spiegel as the company’s No. 2. Since 2015, the position of chief operations officer had been vacant.
