Snap is laying off dozens of engineers, but investors aren’t panicking

Update — March 8, 2018: A Snap spokesperson has confirmed the layoffs. In an email to Snap employees obtained by Recode, VP of Engineering Jerry Hunter said that 120 engineering employees will be laid off over the next few days. Snap had just over 3,000 employees at the end of 2017, which means the company is cutting roughly 4 percent of its total workforce.

“We want to unleash speed and productivity in our organization, while keeping a high technical bar,” Hunter wrote. “That required us to think carefully about the shape of the organization, and where each member of our team fits.”

You can read Hunter’s full email below.

Snap is preparing for another round of layoffs, and the company’s engineering team is expected to take the bulk of the cuts, according to a source familiar with the company.

Managers are being asked to identify team members who will be let go, though the timing of these layoffs is unclear. Cheddar, which first reported the layoffs, said that they’ll be the biggest in company history and “could number over 100 people.”

Cheddar is reporting that the cuts are exclusive to Snap’s engineering team, but one source told Recode that other employees outside of engineering could also be impacted.

A Snap spokesperson declined to comment.

Snap has cut employees before: It laid off about a dozen employees from its hardware division last fall, and laid off a few dozen employees, including some on its content team, earlier this year during a restructuring.

It’s possible that Snap is simply trying to eliminate underperformers. The company did not give out end-of-year cash bonuses in 2017 because employees “didn’t beat internal goals,” according to Bloomberg.

The company, which has been public for just over a year, has been dinged in the past for excessive spending. It’s also possible that Snap is trying to work its way toward profitability, though that’s not usually a major priority for a young growth company.

Investors don’t seem to be worried about the move. Snap stock was up about 2.5 percent on Wednesday before the news, but has dropped down closer to Tuesday’s closing price.

Here is an email from Snap VP of Engineering Jerry Hunter to Snap employees.

Team -

Over the last few weeks I’ve worked closely with our key leaders to create a plan for restructuring our team to make it stronger. We kept a few important goals in mind: 1) We will unify the entire engineering organization as a single, powerful and diverse team that is highly productive, extremely innovative, and technically excellent. 2) We will organize around our key priorities, specifically, addressing the technical debt that we have accrued over the years so that we can develop a product that engages customers and drives Snap forward. 3) We will deploy an organizational structure that aligns top talent with the most critical priorities, creates clarity around our mission, drives accountability, and rewards technical excellence in product development.

Having high-performing, technically excellent, and appropriately aligned teams will be critical to building both a compelling product and a compelling culture for engineers. We want to unleash speed and productivity in our organization, while keeping a high technical bar. That required us to think carefully about the shape of the organization, and where each member of our team fits. As part of this, we have made the exceptionally difficult decision to exit just over 120 members of our team from the company. We are doing this after a thoughtful and respectful review of each team member and with appreciation for the many contributions they have made to Snap. All impacted employees will be eligible for a transition package that includes resources to help them with the next step in their career.

Over the next few days all of you will learn more about your role in the organization. We will also have an All Hands on March 14 to cover the new organization in detail, talk about the mission of each new team, and address your questions face-to-face. We have important and challenging opportunities ahead of us and you have our commitment that we are investing in top talent and key priorities as a result of this action.

Thank you for your trust, patience, and flexibility. I know this is a challenging moment, but I am convinced that this is an important step to help us build the future of Snap. Please don’t hesitate to reach out to me with any questions.

Jerry

This post was originally published on March 7, 2018.

This article originally appeared on Recode.net.