Snap will lay off about 1,000 employees, or roughly 16% of its full-time workforce, as the company accelerates its use of artificial intelligence to streamline operations.
The social media firm said on Wednesday that the cuts will also include the closure of more than 300 open roles. Snap had about 5,261 full-time employees as of December.
This action comes weeks after activist investor Irenic Capital Management urged the Snapchat parent to improve performance and optimise its business. The firm holds an economic interest of about 2.5% in Snap.
Snap said advances in AI are enabling it to operate with smaller, more focused teams. The company added that AI now generates more than 65% of its new code.
Chief Executive Evan Spiegel said the layoffs form part of a broader effort to reduce costs and improve efficiency. Snap expects to cut more than $500 million in annualised expenses by the second half of the year.
The company estimates it will incur between $95 million and $130 million in layoff-related charges, mostly in the second quarter.
Shares of Snap rose about 9% in premarket trading following the announcement, although the stock remains down about 31% so far this year.
The restructuring comes as Snap continues to invest in its augmented reality glasses unit, Specs, which it plans to launch this year. However, Irenic Capital has called for the business to be spun off or shut down, citing more than $3.5 billion in investment and about $500 million in annual losses.
“Cutting costs may appease an activist in the near term,” said Russ Mould, investment director at AJ Bell, adding that questions remain about the company’s long-term competitiveness.
The layoffs reflect a broader trend across the technology sector, where companies are adopting AI tools to automate routine tasks and reduce headcount. More than 80 tech firms have cut over 71,000 jobs this year, according to Layoffs.fyi.
Snap expects first-quarter revenue to rise about 12% to $1.53 billion, broadly in line with market estimates. It also forecast adjusted core profit of about $233 million, above expectations.
The company is scheduled to report results on May 6.
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