Companies are downsizing everywhere you look and the latest update we have is news of the Snapchat layoffs moving forward this month. Snap Inc., the parent company of Snapchat, announced that it was planning to lay off 10 percent of its global workforce, which could add up to around 500 employees on the company roster. The information on the company’s decision was revealed in a filing with the Securities And Exchange Commission (SEC) on 5 February 2024. Snapchat’s revenue in the third quarter of 2023 was up at almost $1.2 billion according to Statista, a fair bump up from $1.07 billion in the previous quarter. The app is among the top 10 most popular social media apps as of January 2024, and while it is significantly behind the top 5, its 750 million active users are no small feat. Despite the decent performance, however, we fall back to the story of the Snapchat layoffs.
Image – Freepik
Understanding the Snapchat Layoffs
The reports we’re seeing about layoffs at Snapchat are not the first round of employee cuts at the company. Back in November 2023, the company had a small round of layoffs after the third quarter earnings report was released by the company, where 20 employees with product management titles were relieved from duty. The surprising fact is that the decision didn’t occur as a result of low revenue numbers or poor performance—the company sales grew 5 percent year over year according to CNBC. Instead, the company wanted to speed up the decision-making process even further and reduce overhead costs. This puts into perspective the fact that even good overall performance by the company cannot guarantee job security.
As depressing as that thought is, it does highlight the realities of the corporate field. The current Snapchat layoffs again do not seem to be due to any sort of financial struggle, although the Snapchat shares did witness a drop but appear to be back up again at $17.22. In the SEC filing, the company reported their intention behind the decision stating, “In order to best position our business to execute on our highest priorities, and to ensure we have the capacity to invest incrementally to support our growth over time, we have made the difficult decision to restructure our team.”
The filing for the Snapchat layoffs also mentioned estimates for the pre-tax charges ranging between $55 million and $75 million for severance pay and other associated costs, of which $45 million to $55 million is expected to be future cash expenditures. While they haven’t indicated which teams will be most affected and when exactly the employees will be let go, they do state their expectations to incur these costs in the first quarter of 2024 unless they run into any local regulations for employees in other countries. Employees will likely be hearing about their jobs from Snap CEO Evan Spiegel and his team right about now.
The Future of Work For Snapchat
The company is likely looking to shake up its workforce and drop any loose players while getting a stronger hold on the future direction of the company. Snapchat’s ad revenue makes up a pretty sizable chunk of the company’s profits and it’s likely they will centre their attention more closely on the revenue stream.
“We are reorganizing our team to reduce hierarchy and promote in-person collaboration.”
—-Snap spokesperson; reported to TechCrunch
Snap CEO Evan Spiegel reportedly has high ambitions for the company in 2024, which makes it even more obvious why the company is getting comfortable with making big moves by shuffling around its employees. According to The Verge, the company intends to grow daily users by 18 percent and take the 7 million Snapchat Plus subscribers and double them up. Snapchat ad revenue is also expected to be boosted by about 20 percent but how they plan to do this remains uncertain. What we do know is that with so many missing voices at the table and such drastic changes occurring so frequently, employees will probably be left feeling nervous about where the company heads next with their planning and strategy.
Snapchat is also in the midst of a public callout by the US Senate on the matter of the safety and security of its platform, which puts Snapchat’s shares in a difficult position as well. The company has been working hard to rebrand itself as being “not like other social media apps” but its primarily teen audience uses the app largely with the same intentions as any other social media platform. “Members of the Committee, I give you my commitment that we will be part of the solution for online safety. We will be honest about our shortcomings, and we will work continuously to improve,” Spiegel stated during the hearing. The company had to speak out about its role in various cases of safety issues and misuse of its platform and while this appears to be an entirely separate issue from that of the layoffs, it has to remain an area of focus if the company hopes to grow.
