Snap Inc., the company behind Snapchat, is planning to eliminate around 1,000 jobs, which amounts to 16% of its total workforce. CEO Evan Spiegel has described this situation as a “melting pot moment” in the quest for consistent profitability.
In a memo sent out on Wednesday, Snap announced these major layoffs, which Spiegel referred to as a tough yet necessary measure to restructure the company’s operations. The layoffs will also involve closing over 300 open positions and are anticipated to lower Snap’s annual costs by more than $500 million by 2026. Restructuring will bring one-time expenses ranging between $95 million and $130 million.
Spiegel directly communicated with employees about the challenges inherent in this decision, expressing regret for those who will be leaving the company. “This is a very difficult decision to make, and I deeply regret it for my departing colleagues,” he stated in the memo, adding that their contributions to Snap have been valuable and the company is committed to assisting them through this transition.
Last fall, Spiegel characterized Snap’s situation as a melting pot moment that necessitated quicker and more efficient work processes, alongside a decisive shift towards profitable growth. Since then, management has assessed the company’s operations, leading to what Spiegel described as a challenging decision to invest in areas likely to yield long-term value. Ultimately, the aim is to create a clearer path toward net profitability.
A key focus of Snap’s new strategy involves aggressively integrating AI into its operations. Spiegel mentioned to staff that the rapid advancements in artificial intelligence would enable the remaining team to lessen repetitive tasks, speed up product development, and enhance support for users, partners, and advertisers. “While these changes are necessary to realize Snap’s long-term potential, we believe rapid advances in artificial intelligence will allow our team to reduce repetitive work, increase speed, and better support our communities, partners, and advertisers,” he noted. Furthermore, he highlighted that small teams are already capitalizing on AI tools to make significant progress on various key initiatives.
The company revealed that around 65% of newly generated code is being produced by AI.
Along with the internal memo, Snap shared an investor presentation detailing three main focus areas for growth, including investments in markets with the most robust monetization, expanding paid subscriptions through Snapchat+, and developing higher-margin advertising formats.
Looking ahead, Snap anticipates first-quarter revenue to be $1.529 billion, with adjusted EBITDA projected at $233 million.
The severance package for departing U.S. employees will include four months’ salary, continued health insurance, stock vesting, and career transition support. For international employees, Snap plans to adhere to local practices while aiming to provide comparable assistance as per local standards.
In his closing remarks, Spiegel acknowledged the difficulties for those who remain. “To everyone on this journey: Change at this scale and at this speed is never easy or seamless,” he wrote. “Thank you for your resilience, compassion, and dedication to each other and to the communities and partners we serve. Our responsibility is to move forward with clarity, empathy, and determination to build a faster, stronger, and more sustainable Snap for the long term.”
