Social media and camera company Snap has experienced slowed revenue growth in the last two quarters.
CEO of the company, Evan Spiegel, told investors about the issues the company has faced: “The combination of macroeconomic headwinds, platform policy changes, and increased competition have limited the growth of campaign budgets.
“In some cases, advertisers have lowered their bids per action to reflect their current willingness to pay.”
On the back of the sustained pressure Snap has faced, the company has announced that it will be cutting 20% of its headcount. This amounts to roughly 1,200 people.
The impact of these cuts will vary from team to team, but the hardware division and those who joined the company from the Zenly acquisition are reportedly going to be impacted. These teams have been responsible for Snap’s AR Spectacles glasses and the Pixy camera drone.
In response to the challenges that Snap is facing, the company has announced that its looking to develop its direct-response advertising platform.
This platform would have user prompts and give advertisers a better understanding of the successful elements of their promotions.
Currently Snap has 347 million daily users, but it has only been able to turn a profit a single time since it went public in 2017.
Warning signs for employees
Earlier this year, a performance improvement plan recommended that managers at Snap should cut at least 10% of their teams. To many on the ground, this was unsurprising as the company’s value has plummeted by 86% over the last year.
However, the number of layoffs announced far surpass initial predictions. The decision also comes after a hiring freeze in May.
Unfortunately, many technology companies have made similar choices when it comes to hiring. The likes of Apple and Meta have re-evaluated hiring strategies and have similarly cited a slowing economy as a recession looms.
So far, technology industry layoffs this year number more than 70,000. Despite this, it is worth noting that every company has unique reasons to let go of staff even if a recession underpins the move.
With this in mind, it is time to clearly communicate how your company is addressing the future in order to keep staff and be honest and transparent about possible challenges with those who may no longer have job security.
UNLEASH has reached out to Snap for comment but has not received a response.
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