Snap Inc. (NYSE: SNAP), parent company of Snapchat, will be cutting staff and scrapping various projects, including its lineup of Snap Originals premium shows and in-app games. Shares rose 15% amid the news.
In a memo sent by CEO Evan Spiegel, Snap is “restructuring our business to increase focus on our three strategic priorities: community growth, revenue growth, and augmented reality.” Furthermore, he added that the company’s year-over-year revenue growth rate for the quarter of 8% “is well below what we were expecting earlier this year.”
“While we have built substantial capital reserves, and have made extensive efforts to avoid reductions in the size of our team by reducing spend in other areas, we must now face the consequences of our lower revenue growth and adapt to the market environment,” Spiegel said.
The company is also set to terminate its Snap Minis third-party apps and Snap Games. Furthermore, Snap will begin the “process of winding down” of its Zenly map product and Voisey music feature, which were both acquired by the company.
Snap recently promoted Jerry Hunter from Senior vice president of engineering to chief operating officer. Hunter will remain in charge of Snap’s engineering unit, Speigel confirmed.
“Changes of this magnitude are never easy, and we must act decisively to meet this moment as a team,” Spiegel said. “I am proud of the strength and resilience of our team as we have navigated the myriad challenges of growing our business in a highly competitive industry during uncertain and unprecedented times.”