Snap Inc., the parent company behind the popular social media platform Snapchat, has now become the latest company to make a substantial reduction in its global workforce. According to media reports, the social media company will lay off 10% of its full-time staff, which is set to impact roughly 530 employees. As of the third quarter of 2023, Snap boasted a robust workforce comprising 5,367 employees.
The official Securities and Exchange Commission (SEC) filing by Snap provides additional insights into the rationale behind these layoffs. Snap aims to “best position our business to execute our highest priorities” and create flexibility for incremental investments over time. The decision also falls in line with the company’s strategy to “reduce hierarchy and promote in-person collaboration,” and Snap maintains that the cuts “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.”
This development comes on the verge of Snap reporting its earnings for the winter quarter of the previous year (so the reasons for the layoffs may become more obvious soon). According to Snap, the potential position eliminations in different countries are being subject to local law and consultation requirements as well.
Snap acknowledges the financial implications of the workforce reduction, estimating pre-tax charges between $55 million and $75 million. These charges predominantly encompass severance-related costs, with future cash expenditures expected to fall within the range of $45 million to $55 million. The initial burden is anticipated during the first quarter of 2024. Assurances are also extended regarding the provision of severance packages to affected employees, although specific details remain undisclosed for now.
This recent layoff is also part of a broader series of strategic workforce adjustments Snap has undertaken in recent years. The major restructuring in 2022 had resulted in the elimination of over 1,300 positions – at that tome, the company maintained that the layoffs were part of its cost-cutting measures, and came alongside the cancelling of most original Snapchat shows. In November of the same year, Snap parted ways with 20 product managers. The new development also ensures that Snap joins the long list of firms to have enacted layoffs in recent times – so far, more than 120 companies have laid off over 3200 employees (32496, to be exact) this year.
