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Bottom line: Snap Inc. CEO Evan Spiegel publicly shared a memo sent to employees on August 31 outlining a significant restructuring plan to cope with lower than expected revenue growth and to avoid incurring ongoing losses.
Moving forward, Snap will focus on three areas of interest: community growth, augmented reality and revenue growth. Spiegel said projects that do not contribute to these priorities will be discontinued or receive substantially reduced investment.
Projects already on the chopping block include Snap Originals, Games and Minis as well as Pixy, a pocket-sized drone with an integrated camera designed to follow you around and capture photos or videos. Snap announced the drone in April with a price tag of $229.99 with extra battery packs commanding $19.99 each.
Snap further confirmed it has already started the process of winding down its Voisey and Zenly standalone applications.
Accompanying the pullbacks are considerable job cuts that'll reduce Snap's 6,000-member team size by approximately 20 percent. Spiegel said the size of the reduction should lower the risk of ever having to do it again and added that even with the extensive layoffs, the team will still be larger than it was this time last year.
Those impacted by the job cuts will be notified as soon as possible and will receive at least four months of compensation replacement as well as financial assistance to enroll in Cobra health insurance through the end of the year.
Snap went public in early 2017 and hit a high of more than $83 last September. Year to date, however, the company's share value has dropped more than 76 percent. As of this writing, the stock is trading up nearly nine percent on today's news.
In the memo, Spiegel also announced the promotion of Jerry Hunter to COO effective today. He will lead monetization efforts and continue to oversee the engineering teams that already report to him. The company also poached Ronan Harris from Google, who will join Snap as EMEA president in October.
Image credit: Alexander Shatov