Snap (NYSE:SNAP) shares jumped 8.2% in premarket trading on Wednesday after the company announced a significant round of layoffs impacting about 1,000 full-time employees, or roughly 16% of its global workforce.
Chief Executive Officer Evan Spiegel said in a memo to staff that the cuts are part of efforts to improve efficiency as Snap focuses on achieving profitable growth. The company is also eliminating more than 300 unfilled positions.
Spiegel told employees that the workforce reduction and hiring slowdown are expected to lower Snap’s annual cost base by over $500 million by the second half of the year.
The restructuring follows first-quarter results showing revenue increased 12% to $1.53 billion, slightly above the $1.52 billion consensus estimate.
In the internal memo, Spiegel pointed to advancements in artificial intelligence as a contributing factor, noting that improved technology is enabling employees to work more efficiently. Many staff members were instructed to work remotely on Wednesday as the layoffs were carried out.
The latest cost-cutting initiative reflects Snap’s ongoing efforts to streamline its operations and move toward profitability, amid continued pressures in the digital advertising sector.