Snap said it will lay off 20 percent of employees — roughly 1,280 workers — as part of a major restructuring to save an estimated $500 million in costs annually.
Snap has made the decision to discontinue investments in Snap Originals, Minis, Games, and Pixy, among other areas. Snap has also started the process of winding down the standalone applications Zenly and Voisey.
Snap said it will focus on improving sales and the number of Snapchat users. Snap in July said daily active users increased 18 percent year-over-year to 347 million in Q2 2022. Snap revenue increased 13 percent to $1.11 billion and net loss of $422 million in Q2.
Santa Monica, California-based Snap in May said that it would miss its revenue targets due to worsening economic conditions.
Revenue growth so far in the third quarter is up 8 percent from the previous year, which is “well below what we were expecting,” Chief Executive Evan Spiegel wrote in a memo to employees that was also released publicly on its website on Wednesday.
If that growth rate holds, it would be the slowest revenue growth Snap has had since becoming a public company in 2017 – a far cry from triple-digit growth rates it has recorded in previous quarters.
Snap’s Chief Business Officer Jeremi Gorman and Vice President of ad sales Peter Naylor are leaving to join Netflix and build the streaming service’s ad business.
Despite reducing spending in some areas, Snap must face the consequences of lower revenue growth and adapt to the market environment, CEO Spiegel wrote in the memo.
Snap said senior vice president of engineering Jerry Hunter will be promoted to chief operating officer and will be responsible for improving coordination between engineering, ad sales and product teams.
Snap and other social media platforms including Meta have suffered from privacy updates that Apple introduced on iPhones last year.
These have made it difficult for digital ad sellers and advertisers to target ads to relevant audiences and measure their sales results.
Closer collaboration between engineering and sales could potentially help Snap improve targeting and measurement of its ads.
The restructuring of the ad sales division also includes three new president roles that will oversee the Americas, Europe, Middle East and Africa, and Asia-Pacific regions.
Ronan Harris, Managing Director of UK & Ireland at Google, is joining Snap as President, EMEA.
Snap is currently searching for Presidents for Asia Pacific and Americas regions.
Snap will also discontinue investment in its Pixy flying drone camera, just a few months after its debut in May.