In its latest staff cuts, Snap revealed plans to reduce its global headcount of full-time employees by approximately 10%, or around 529 employees. Snap Inc., the parent company of Snapchat, justified the layoffs as necessary to position its business for optimal execution of its highest priorities and to ensure capacity for incremental investment to support long-term growth.
The restructuring would result in pre-tax charges ranging from $55 million to $75 million, primarily comprising severance and related costs, with $45 million to $55 million expected to be future cash expenditures. Most of these expenses are anticipated in the first quarter of 2024.
Potential job eliminations in each country are subject to local law and consultation requirements, potentially extending the process into the second quarter of 2024 or beyond in certain countries.
Snap will be reporting its fourth-quarter earnings tomorrow after the market closes. The company, led by CEO Evan Spiegel, undertook significant workforce reductions in August 2022, when it laid off about 20% of its employees, totaling approximately 1,600. The latest layoffs follow Snap’s strategic decisions to streamline its operations, including shutting down several initiatives, such as Snapchat’s original series. In a smaller round of layoffs in November 2023, the company parted ways with about 20 product managers.
Despite challenges, Snap has continued to innovate and improve its ad-serving platform, with its third-quarter revenue reaching $1.19 billion and boasting 9 million new daily active users, bringing the total to an average of 406 million. As Snap navigates through these changes, investors and industry analysts await its financial results and strategic outlook to gauge its trajectory in an evolving digital landscape.
The decision comes amidst a wave of layoffs across the tech sector, ranging from Amazon to Google to Microsoft. Investors tend to favor tech companies’ initiatives to reduce their workforce. Meta, for instance, underwent a “year of efficiency,” resulting in significant cuts to its staff. Following this restructuring, the company experienced a surge in its stock value, reaching an all-time high after reporting robust earnings and declaring its inaugural dividend.
