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This is Snap’s turnaround plan

In a leaked internal memo, CEO Evan Spiegel explains how Snapchat aims to reach $6 billion in revenue and 450 million users

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Snap CEO Evan Spiegel.
Snap CEO Evan Spiegel.
Alex Castro / The Verge

After getting “punched in the face hard” by a cratering stock price and brutal layoffs, Snap CEO Evan Spiegel told employees this week how the company plans to still grow its revenue and user base next year.

In an internal memo sent to employees on September 6th and obtained by The Verge, Spiegel said the company aims to grow Snapchat’s user base by 30 percent to 450 million by the end of next year, and that it aims to increase revenue to $6 billion in 2023. He said the plan is for $350 million of that revenue to come from the paid subscription Snapchat recently introduced to unlock additional features, which is already on track to hit 4 million subscribers by the end of this year.

“We saw challenges on the horizon, and hedged our bets accordingly, but still got punched in the face hard by 2022’s new economic reality.”

“We saw challenges on the horizon, and hedged our bets accordingly, but still got punched in the face hard by 2022’s new economic reality,” Spiegel wrote in the nearly 4,000-word memo to Snap employees. “We didn’t anticipate the War in Ukraine, skyrocketing energy and food costs, persistently high inflation, and a more than 45x increase in the fed funds rate since last September. We have decisively entered a new era, and we must adapt and overcome to succeed in this new reality.”

To achieve its user growth goal, Spiegel said Snap will focus on “increasing our penetration in at least one new large country or demographic” and onboarding more 30- to 40-year-olds. Funneling more users into the Map and Spotlight sections of Snapchat “helps to make our service more compelling for our community, harder to copy, and more resilient to competition, and increases our monetization opportunity over the longer term.”

Russ Caditz-Peck, a Snap spokesperson, confirmed the authenticity of the memo.

Snap recently laid off 20 percent of its workforce, cutting whole teams and projects like its recently introduced camera drone. Even still, Spiegel said the company remains committed to augmented reality, which he thinks “represents the next major evolution in computing,” and that the next generation of its Spectacles AR glasses is in development.

AR “represents the next major evolution in computing”

“Leadership in augmented reality is important to Snap because it helps us build a durable competitive advantage that comes from investing over the long term, building things that are technically difficult, and growing a platform that is increasingly hard to replicate,” Spiegel said. “It also positions us to benefit from the next major platform shift: mobile to wearables. Leading this shift will be one of our most meaningful contributions to human progress; empowering people to express themselves, live in the moment, learn about the world, and have fun together.”

Here are some other highlights from the memo, which you can read below in full:

  • Snap aims to grow time spent on content by 10 percent per user in 2023.
  • It wants 35 percent of users interacting daily with the Map tab of Snapchat and 30 percent of users on Spotlight, its TikTok competitor, every day next year.
  • The plan is to make $6 billion in revenue and at least $1 billion in free cash flow in 2023.
  • Snap wants AR-based advertising to make up 10 percent of its total ad revenue next year.
  • The company wants to grow the number of people who use its AR effects, called Lenses, in other apps to 1 billion monthly users next year.
  • It is setting up an AR enterprise division to sell its technology to other companies.
  • “We will help developers confidentially explore the possibilities that are enabled with our next-generation” of Spectacles, according to Spiegel, which suggests the next version won’t be commercially available for sale.

You can read Spiegel’s full internal memo, dated September 6th, below: