The company has laid off around 20% of its employees and reprioritized several investments as a measure of reducing costs.
Snap, the tech giant that owns Snapchat, has confirmed that it is laying off around 20% of its employees – approximately 1,300 people – as a measure of reducing costs. The company has also reprioritized several investments within the company – it canceled a number of original Snapchat shows and shelved several projects, including putting the company's games business on hold.
"Given our current lower rate of revenue growth, it has become clear that we must reduce our cost structure to avoid incurring significant ongoing losses," Snap wrote in a memo to investors. "While we have built substantial capital reserves, and have made extensive efforts to avoid reductions in the size of our team by reducing spend in other areas, we must now face the consequences of our lower revenue growth and adapt to the market environment."
The company is now restructuring its business focusing on three key priorities: community growth, revenue growth, and augmented reality. According to Snap, any projects that do not contribute to these strategic directions will be "discontinued or receive substantially reduced investment."
This includes discontinuing investments in Snap Originals and the company's games and mini-apps. In addition, Snap will halt further development of the Pixy drone camera and will start the process of winding down the standalone applications Zenly and Voisey.
The memo noted that the changes will save the company about $500 million. This figure includes a $50 million reduction in content costs and a $450 million reduction in adjusted operating experiences.
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