Snap is set to cut down its workforce by even more than employees expected.
After two consecutive quarters of slowed revenue growth impacted by ongoing struggles within its advertising business, Snap is expected to lay off between 20% and 25% of its workers, Insider has learned. Workers have not been officially informed about the layoffs, nor who specifically will be impacted, but expect to hear more details on Wednesday, a person familiar with the situation said.
While the layoffs are said to be essentially company-wide, certain departments will lose more people than others, including engineering and hardware, the person said. The layoffs were first reported by The Verge, which further specified people involved in the already discontinued Snap Pixy mini-drone will be hit by layoffs, along with people within Zenly, an app Snap acquired last year. A Snap representative declined to comment.
Snap workers have been expecting layoffs for weeks as the company has struggled much of this year with its financial performance. Derek Andersen, Snap's CFO, said during a call with analysts in July the company had "seen a pretty significant deceleration in demand over the last 90 days" from advertisers. Demand has been slowing, he added, for almost a year, starting when Apple implemented changes to privacy policies for its devices, letting people opt out of ad tracking. Over the last year, Snap's stock has fallen by more than 86%.
The company in May put in place a hiring slowdown that has since turned into a complete hiring freeze. Evan Spiegel in July noted the advertising industry, the core of Snap's business, had "slowed significantly" and the company was "recalibrating" and "reprioritizing" its business. Then, earlier this month, Snap's head of engineering was asked directly by workers in a meeting if they should be expecting layoffs. His answer was for them to wait and see what happened as a company reorganization took effect.
As the reorganization comes to pass, the number of workers set to be let go is more than people initially expected. Earlier this year, managers at Snap received a "recommendation" that they should PIP at least 10% of their teams. A PIP, or performance improvement plan, is when people seen as underperforming are ostensibly put on a path to improvement. It's generally seen among tech workers as a precursor to being let go. Snap employees expected any layoff action to be in line with the PIP.
Instead, it appears to be more than double that. After aggressively hiring last year, Snap grew its workforce to over 6,100 people. A layoff of 20% to 25% means roughly 1,200 to 1,500 people will be losing their jobs.
Layoffs and hiring freezes have swept throughout tech in recent months, as a sudden boom in demand for products and services has waned along with the pandemic. Tech companies from Google to Twitter have dramatically slowed hiring or frozen it altogether. Dozens of others have conducted layoffs, with as many as 30,000 tech workers losing their jobs this year at companies like TikTok and Oracle, according to a running tally by Insider. An outside tracker, Layoffs.FYI, puts industry tech layoffs this year at more than 70,000.
Are you a Snap employee or someone with insight to share? Contact Kali Hays at khays@insider.com, on secure messaging app Signal at 949-280-0267, or through Twitter DM at @hayskali. Reach out using a non-work device.
Contact Tom Dotan at tdotan@insider.com or on Twitter at @cityofthetown.
