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Snap cancels original shows, other projects amid 20% layoffs

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Snap is laying off about 20 percent of its more than 6,400 employees and is canceling its original shows, in-app games and several other projects as part of a corporate restructuring.

In a corporate memo on Wednesday that you can read in full below, CEO Evan Spiegel wrote that Snap is “restructuring our business to increase focus on our three strategic priorities: community growth, revenue growth and augmented reality.”

Spiegel said the company’s revenue growth had accelerated again to 8 percent from a flat end-July, suggesting ad business is beginning to recover. Still, that’s a far cry from the more than 40 percent revenue growth Snap saw before Russia invaded Ukraine, which it blamed for a slowdown in marketing spending, and the digital advertising market began to contract earlier this year. In a filing with the SEC, Snap said it expects the layoffs, which were first reported by The edge on Tuesday, to save it $500 million in costs annually.

“Unfortunately, given our current lower revenue growth, it has become clear that we need to reduce our cost structure to avoid incurring significant ongoing losses,” Spiegel wrote in the memo. “While we have built significant capital reserves and have made extensive efforts to avoid reducing the size of our team by reducing spending in other areas, we now have to face the effects of our lower revenue growth and adapt to the market environment. “

Spiegel said Snap would be discontinuing the original shows that appear in Snapchat’s Discover section, along with its in-app games and HTML thumbnail applications built by third-party developers. The company’s self-flying camera drone, Pixy, is being canned after its April debut. Spiegel said the company is also “phasing out” Zenly, a separate app for seeing where your friends are on a map bought in 2017, and Voisey, a TikTok-esque music app that Snap bought in 2020.

Snap announces its latest series of original shows in May 2022
Photo by Noam Galai / Getty Images for Snap Inc.

Since at least 2017, Snap has invested in original, vertically shot shows for its Discover section. Just earlier this year, the company announced a series of new shows starring such celebrities as Olympic gymnast Simone Biles and social media star Charli D’Amelio. In its latest earnings report, Snap boasted that 10 million Snapchat users had watched The battle withina new Snap show featuring professional boxer Ryan Garcia.

The company’s platform for mini-apps and games from third-party developers first debuted in 2020 as a way for users to do things like book concert tickets with friends without leaving Snapchat. But the platform has remained relatively buried in Snapchat and has not contributed to Snap’s advertising business in any meaningful way.

Snap’s leadership team is also being shaken up this week: Spiegel announced that Jerry Hunter, the company’s chief of engineering, will become chief operating officer overseeing all revenue, growth, partnerships and engineering. Jeremi Gorman, Snap’s chief business officer and top ad manager, announced on Tuesday that she was leaving to run Netflix’s upcoming ad-supported tier.

You can read Mirror’s full memo to Snap employees below:

Dear team,

Thank you for your patience as we progress through our 2023 financial planning and reprioritisation process. Our forward-looking revenue visibility remains limited and our current QTD revenue growth of 8% YoY is well below what we expected earlier this year. While we will continue our work to accelerate revenue growth again, we must ensure the long-term success of Snap in any environment. For planning purposes, we modeled a range of outcomes, some of which assume low revenue growth will continue into next year, and developed our 2023 plan to generate free cash flow even in a low-growth scenario.

The investments we’ve made in our business to date have been based on increased revenue growth based on our huge opportunity and proven track record of execution, including 2x growth in Snapchat community size and 10x growth in lagging revenue of twelve months since our IPO in 2017. Unfortunately, given our current lower revenue growth, it has become clear that we need to reduce our cost structure to avoid incurring significant ongoing losses. While we have built significant capital reserves and have made extensive efforts to avoid reducing the size of our team by reducing spending in other areas, we must now face the effects of our lower revenue growth and adapt to the market environment.

We are restructuring our business to increase focus on our three strategic priorities: community growth, revenue growth and augmented reality. Projects that do not directly contribute to these areas will be halted or will receive significantly less investment. We have worked thoughtfully and deliberately to strike the right balance between focusing our investments and continuing to innovate, and we have made the decision to discontinue our investments in Snap Originals, Minis, Games and Pixy, among others. We have also started to phase out the standalone applications Zenly and Voisey.

As a result, we have made the difficult decision to reduce the size of our team by approximately 20%. The scale of these changes varies from team to team, depending on the level of prioritization and investment required to execute on our strategic priorities. The magnitude of this cut should significantly reduce the risk of us ever having to do this again, while at the same time balancing our desire to invest in our long-term future and accelerating our top line growth again. All in all, the size of our team will remain larger than last year around this time.

We will miss the many kind, bright, and creative team members who have contributed to Snap’s growth, and I am deeply sorry that these changes are necessary to ensure the long-term success of our business. The friendship and camaraderie we all share as a team makes these changes especially painful, and we will do everything we can to treat our departing team members with the respect and gratitude they deserve.

Team leaders will notify their affected team members as soon as possible and provide them with detailed guidance. In the United States, we will provide at least four months of compensation replacement, as well as financial assistance to enroll in COBRA, giving team members until the end of the year to find new opportunities while still receiving compensation and health benefits. from Snap. Outside of the United States, we follow the local processes required in each country and align fees and benefits with local standards, with the intent to provide comparable levels of support regardless of geographic location. We will also provide outplacement support and launch an opt-in talent list to help departing team members discover new opportunities.

We recognize that these changes could have a particularly severe impact on team members who rely on work permits to live outside their home country, and we will provide additional support and flexibility to these affected team members to minimize disruption to their immigration status.

We are also reorganizing our team to better meet the challenges of the current macroeconomic environment and to make as much progress as possible in the areas of our business that we can control as quickly as possible. In particular, significant opportunities remain to improve coordination and prioritization across our engineering, sales and product teams. To capitalize on this opportunity, we are promoting Jerry Hunter to Chief Operating Officer effective today. Jerry will lead our monetization efforts across our three operating regions (EMEA, APAC and Americas), as well as our growth, partnerships and content teams, AR Enterprise and SMB. He will also continue to lead the Engineering teams that currently report to him.

Jerry has repeatedly demonstrated operational rigor at scale and guided our business through several challenging transitions, including building out our advertising platform, rebuilding our Android product, our infrastructure optimizations, and most recently significant investments in our Platform Integrity team. I believe Jerry’s promotion will result in both better short-term execution and a faster rate of innovation in the long run.

We are also realigning our regional operational leadership by creating a new presidential role in each of the Americas, EMEA and APAC regions. Our three regional presidents will provide in-market leadership, lead cross-functional efforts across our business, oversee local operational needs and lead our go-to-market strategy. Ronan Harris, Vice President and Managing Director of UK & Ireland at Google, will join Snap as President, EMEA from October. Ronan will join our executive team and report to Jerry. We are currently seeking presidents for our APAC and America regions.

I will be giving a presentation about these changes to our entire team tomorrow morning, and will move on to “Ask Evan” shortly after. My annual letter to the team will be distributed next Tuesday and our Strategic Planning Process for 2023 will follow.

Changes of this magnitude are never easy and we must act decisively to face this moment as a team. I am proud of the strength and resilience of our team as we met the myriad of challenges to grow our business in a highly competitive industry in uncertain and unprecedented times. Thank you for your dedication, hard work and commitment to our community.

evan

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