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Sunday, Feb 25, 2024

Snap’s Layoffs Felt Around the Tech Sector

Tech companies generally saw substantial growth during the pandemic, but some are having to chop payrolls with the ongoing economic turmoil. Snap Inc. and GoodRx Holdings Inc., both of Santa Monica, announced big staff cuts last week.

Snap said it will lay off approximately 20% of its workforce as part of a plan to restructure its business to focus on community growth, revenue growth, and augmented reality. It gave no number of layoffs, but 20 percent of its reported empoyee base of 5,660 implies more than 1,100 lost jobs.

“Changes of this magnitude are always difficult, and we are focused on supporting our departing team members through this transition,” Evan Spiegel, chief executive at Snap, said in a statement. “We are deeply grateful for their many contributions to Snap.”

Tracy Hernandez, founding chief executive of the Los Angeles County Business Federation, said what is happening at Snap is important to L.A.’s business landscape because the company is a big employer and small businesses use its digital ad platforms to gain customers and grow their brands.

“We’re all looking out for economic indicators of the strength of our economy as a whole, so when Snap is not making their revenue targets because businesses aren’t advertising as much or what they thought they could capture, that indicates other things about the economy.”

GoodRx’s announcement came in an SEC filing Aug. 30 saying it would lay off 16% of its workforce by the end of October. Layoffs will be in its technology and marketing divisions.
“The company is focused on efficiently growing its core prescriptions business, accelerating its pharma manufacturer solutions business (that provides discounts on brand name drugs), and doubling down on consumer engagement,” the announcement read. “As the company focuses on these goals, it is consolidating functions and eliminating or reducing investment in areas of lower focus.”

GoodRx sales have been hit hard in the second and third quarters as a result of a dispute with a major pharmacy operator that refused to accept discounts from GoodRx customers. The dispute was resolved last month, too late to turn around third-quarter revenue.

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