Snap might lay off 20% of its workforce
What's the story
Snap Inc, the parent company of Snapchat, is gearing up for major layoffs, according to tech reporter Alex Heath. The job cuts could affect as much as 15-20% of its workforce, which currently stands at over 5,000 employees. Some teams within the company could even see a reduction in their numbers by half. However, the exact number of affected employees remains unclear at this point.
Uncertainty
AI-driven layoffs
The newsletter also highlighted uncertainty over how CEO Evan Spiegel will present these job cuts as being driven by artificial intelligence. This ambiguity comes amid Snap's ongoing efforts to diversify its business beyond advertising, with a focus on direct-revenue offerings like Snapchat+ and in-app purchases.
Contrasting growth
Hiring spree in Specs unit
Interestingly, while Snap is preparing for mass layoffs, its Specs unit is on a hiring spree. The team, which works on the Lens Studio platform for creating AR experiences for Snapchat and Specs, is expanding. This comes after Snap launched Specs as an independent business focused on AR smart glasses in January this year.
Business growth
Snap's direct-revenue business
In February, Snap said that its direct-revenue business had hit a $1 billion annualized run rate. The growth is largely attributed to its Snapchat+ subscription service. The company also revealed that its total subscriber base has crossed 25 million. These offerings include Snapchat+, the Memories photo and video archive tool, and in-app purchases.
Deal collapse
Deal with Perplexity falls through
In a separate development, Snap's integration deal with Perplexity AI has also fallen through. The $400 million cash and equity deal would have seen Perplexity embed its AI answer tool within Snapchat. However, disagreements over terms delayed the rollout, leading to its cancellation. The payment would have accounted for roughly 7% of Snap's projected revenue.