Snap, the owner of social media platform Snapchat, plans to cut about 10 per cent of its workforce, or about 500 employees, as the technology company seeks to streamline its operations and support business growth.
The company estimates it will incur pre-tax charges of $55 million to $75 million, primarily consisting of severance and related costs and other charges, of which $45 million to $55 million are expected to be future cash expenditures.
The majority of these costs are expected to be incurred during the first quarter of 2024, it said.
Snap, which says it has 406 million daily active users on average, laid off 20 per cent of its staff in 2022 mainly because of a slowdown in advertiser spending on its platform.
“To 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, we have made the difficult decision to restructure our team,” the company said in a filing to the Securities and Exchange Commission on Monday.
“Potential position eliminations in each country are subject to local law and consultation requirements, which may extend this process into the second quarter of 2024 or beyond in certain countries.”
It is also trying to contend with larger and more well-funded social media companies, including Meta Platforms' Facebook, WhatsApp and Instagram, Google's YouTube and Chinese apps, led by TikTok.
Snap's move comes as technology companies continue to lay off employees to streamline operations after a hiring spree during the Covid-19 pandemic.
Last month, Google fired hundreds of employees across its hardware, engineering and digital voice assistant units, triggering speculation about a wider round of job cuts for Silicon Valley technology companies.
The Alphabet-owned company's move aimed to optimise its operational costs, it said.
Google's job cuts followed a round of layoffs by Amazon, the world's biggest e-commerce company.
Its live-streaming unit, Twitch, said it was laying off 500 staff – more than a third of its workforce – calling it a “difficult decision” which intended to help the company “build a more sustainable business” and help it stay for the “long run”.
Amazon also said it was letting go of hundreds of employees in its Prime Video and MGM Studios divisions.
In January, e-commerce giant eBay also said it will lay off about 1,000 employees or an estimated 9 per cent of its full-time staff.
Technology led all industries in job cut announcements in the US last year with 168,032 layoffs, up 73 per cent annually, a report by career consultancy Challenger, Gray & Christmas said.
The total fell short of the annual record of 168,395 cuts announced for the sector in 2001.
The number of layoffs “fell precipitously” over the summer, and then increased in the fourth quarter, the report said. In December, technology companies announced 4,470 job cuts.
“The tech sector will continue to be impacted by the onset of AI [artificial intelligence], mergers and acquisitions, and realigning of resources and talent,” said Andy Challenger, workplace and labour expert and senior vice president of Challenger, Gray & Christmas.
