Snapchat parent Snap has responded to its “incredibly challenging” operating conditions, and will reportedly begin laying off 20 percent of its workforce.

Back in July shares in Snap plummeted more than 38 percent in early trading after it reported disappointing quarterly earnings. It blamed advertisers, saying they had cut spending for the three months to the end of June, due to supply chain disruptions, rising costs and labour shortages.

Now over a month later, the Verge has reported (citing people familiar with the matter) that the firm will begin making job cuts on Wednesday that will affect certain departments including hardware and developer products.

Image: Snap

Job losses

According to the Verge, Snap had been planning the sizeable workforce reduction of 20 percent (over 1,000 employees) for the past several weeks.

This is despite Snap saying last week that its paid Snapchat+ subscription service had reached 1 million users after its launch in June, as the company seeks new sources of revenue.

Some departments are to be hit harder than others, the Verge quoted its sources as saying.

For example, the team working on ways for developers to build mini apps and games inside Snapchat will be severely impacted.

Zenly, the social mapping app Snap bought in 2017 and has since run separately, will also see deep cuts, the Verge reported.

Another team that will see layoffs is Snap’s hardware division.

It should be remembered the Snap hardware division is responsible for its AR Spectacles glasses and the Pixy camera drone.

Image credit: Snap

The Pixy done was only released in May, but was cancelled in early August.

Image credit: Snap

Ongoing pressures

Snap has been under tough pressure for a while now. Earlier this year it said it would slow hiring and look for ways to cut costs.

And Snap’s stock price has lost nearly 80 percent of its value since the beginning of this year, and its dismal second quarter earnings seems to have been the final straw.

In July it reported revenues for the quarter of $1.11 billion (£926m), missing analysts’ expectations of $1.14bn.

As a result, Snap said it would not provide guidance for its current quarter and said “forward-looking visibility remains incredibly challenging.”

Snap usually reports its results before other major social media companies, such as Twitter, Google parent Alphabet and Facebook parent Meta, and thus is seen as something of bell weather for the social networking industry.

Following Snap’s dismal results, Meta missed analysts’ estimates for its second quarter and even posted its first even revenue decline.

Twitter meanwhile posted a net loss of $270 million (£226m) for its second quarter.

Snap is contending with the privacy changes to Apple’s iPhones and iPads, wider economic challenges and increased competition for advertisers from rivals such as TikTok.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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