Snap and Meta announcing cuts
As a confirmation of concerns about lower advertising revenues, both Snap, owner of Snapchat and Meta, born Facebook, have announced cuts. Snap announced it would lay off 20% of its 6 400 staff and cancel a number of projects to lower company costs. Facebook is closing its cryptocurrency business that never really took off and the company is also closing its stand-alone gaming app.
Negative advertising development was the theme already in July when big tech companies presented quarterly reports. Meta for the first time ever reported a quarterly decline. Year-on-year revenue was down 1% to USD 28.8 billion. Competition from TikTok and others meant lower advertising revenue than expected. The company warned that advertising sales were likely to fall again in coming months as e-commerce spending drops after the boom during the pandemic and increasing inflation.
Snap’s shares fell 25% when the company said its loss had grown to USD 422 million, up 178%. The company said “forward-looking visibility remains incredibly challenging”.
In a message to staff Snap´s CEO Evan Spiegel now says the company´s forward-looking revenue visibility remains limited, and current year-over-year revenue growth of 8% is well below what we was expected earlier this year.
He says cost cuts are necessary and that the company is restructuring to increase focus on three strategic priorities: community growth, revenue growth, and augmented reality.
”Projects that don’t directly contribute to these areas will be discontinued or receive substantially reduced investment”, he says adding that the company will not invest in Snap Originals, Minis, Games, and Pixy, among other areas.
!We have also started the process of winding down the standalone applications Zenly and Voisey.”
Senior VP, Jerry Hunter, is appointed Chief Operating Officer to lead monetization efforts across EMEA, APAC, and Americas. Snap is also creating a new President role in each of the Americas, EMEA and APAC regions. Ronan Harris, Vice President and Managing Director of UK & Ireland at Google, is joining Snap as President, EMEA, beginning in October.
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