Snapchat parent cuts 7 percent of its global workforce in March; says will lead to $25 mn in saving

Snap Inc on Friday said it cut 7 percent of its global workforce in March, as disclosed by it in a regulatory filing. The social media company said it would incur about $10 million of cash expenditure due to severance costs to be reflected in the current quarter ending March 31.  As a result of the layoffs, primarily in its engineering and sales teams, the company said it sees savings of about $25 million in 2018. The company had said it had 3,069 employees as of Dec. 31, 2017, according to its annual filing. 

 On reduction in workforce, the statement said, "During March 2018, we implemented a reduction in force plan impacting approximately 7% of our global headcount, primarily in engineering and sales. The reduction in force is to align resources around our top strategic priorities and to reflect structural changes in our business."

It thereafter added, "We estimate that we will incur approximately $10 million of pre-tax cash expenditures, substantially all of which will be severance costs. Additionally, we expect to recognize a stock-based compensation forfeiture benefit of approximately $31 million. The severance charges and any stock-based compensation forfeiture benefit will be recognized in the quarter ended March 31, 2018. As a result of the reduction in force, we expect to recognize savings of approximately $25 million in 2018 and $34 million on an annualized basis related to salaries and payroll taxes. The charges associated with this reduction in force are not material to our consolidated financial position or results of operations."

The Snapchat parent has been under pressure from investors to reduce costs after revenue fell short of analyst expectations during Snap`s first year as a publicly traded company.  Earlier this month, a company memo had shown that the company would cut just over 120 engineers and reorganize its engineering team, Reuters reported. 
The Southern California-based company said the workforce reduction "is to align resources around our top strategic priorities and to reflect structural changes in our business."