Snap Inc., the parent company of Snapchat, the social media application that sends disappearing photos and videos, will be laying off 15-20% of its workforce, according to a reporter Alex Heath's newsletter.
Heath stated in his newsletter 'Sources', that these mass layoffs may lead to some teams being halved, citing people in the know. Heath is also reportedly unsure as to the amount of credit that AI will be given with regards to the layoffs by CEO (Chief Executive Officer) Evan Spiegel.
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The company's direct revenue business reached an annualised run-rate of $1 billion. This progress was on the back of its Snapchat+ subscription service, with its total subscriber base going beyond 25 million.
In the year prior, Evan Spiegel said that Snap was in a "crucible moment" ( a phase of extensive transformation driven by adversity) citing the company's quarterly growth slowing down. Spiegel said that he planned to convert direct revenue into a "durable multi-billion dollar growth driver".
Most of the company's departments are seeing sizable cutbacks, with the company increasing its focus on its AR (augmented reality) smart glasses, increasing hiring with regards to its development.
Snap has demerged its 'Specs' arm and is hiring employees for it, as per the newsletter. Hires are being made to fill out the Lens Studio platform, with developers utilising it to create AR experiences for Specs and Snap.
Specs was announced in January as an independent enterprise with the goal to compete with Meta Platforms in the wearables segment where the latter's Meta Glasses have seen widespread adoption and success.
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Snap also terminated its agreement to receive $400 million in cash and equity from Perplexity to embed the latter's AI answer engine within Snapchat.
The rollout was not followed through with due to a disagreement regarding terms of the agreement, Snap said in an earnings call. The deal would have made up 7% of Snap's projected 2025 revenue.
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