Snap’s slow revenue growth causes the company to slow hire

Several businesses are struggling for growth these times. Snap is not an exception. On Monday, Snap CEO Evan Spiegel gave employees a memo regarding the company’s hiring plans. According to Spiegel, after informing the investors that Snap’s revenue growth wouldn’t be as fast as anticipated, they decided to slow the phasing of hiring for the rest of 2022.

The CEO cited some of the reasons that caused it, including the rising inflation, interest rates, supply chain shortages, labor disruptions, Ukraine-Russia war, and even platform policy changes. Spiegel said that the macro environment has seen deterioration in levels and speed they didn’t expect, so they are expecting to report revenue “below the low end of the guidance range we provided for this quarter.” On a positive note, Spiegel said that the “revenue continues to grow year-over-year,” although it is slower than expected. 

“We believe that the progress we’ve made growing our revenue, combined with the strength of our balance sheet, has positioned us well for the current environment,” the memo reads. “The fundamentals of our business remain strong, our community is growing and engaged, and we are excited about the many opportunities ahead. As a result, 2022 remains a significant investment year for Snap, despite the ongoing market volatility.”

This will push Snap to tighten its belt to ensure that it will be allocating its expenses to the right sections of the business. “Responsibly managing our expenses will allow us to invest through this period of time and emerge stronger as a business,” the memo adds. “Moving forward, we will be taking steps to reprioritize our investments – continuing to invest across our business priorities, but in many cases doing so at a slower pace than we had planned given the operating environment.”

The CEO said hiring for unopened roles will slow down in the next months of 2022 and will move the planned hiring next year. To be exact, the company expects over 500 new team members (compared to the 2,000 people it hired over the past 12 months).

In the end, Spiegel expressed the company’s determination to escape the current situation. The CEO said that leaders are tasked to look for additional cost savings by reviewing the company spending. Nonetheless, Spiegel underscored that the improvements Snap will see for the rest of the year will depend on the employees’ work. “Our most meaningful gains over the coming months will come as a result of improved productivity from our existing team members,” Spiegel added in the memo, “as we work together and help our new team members get to know Snap and learn how to contribute to their full potential.”