Snapchat maker Snap reported Thursday a broader economic loss and refused to predict future performance due to “production-related uncertainties.”
Second-quarter revenue was $ 1.11 billion, an increase of 13% over the previous year. This is the slowest quarterly growth rate ever for the company. Snap said in May that it did not expect to reach its quarterly earnings target due to difficult economic conditions. Net loss was $ 422 million, well above the previous year’s $ 152 million, as company spending increased by nearly 29%.
Snap added that this quarter’s revenue was “almost flat” compared to a year ago and that hiring rates were “significantly reduced.” Correspondingly, the company’s share price plummeted by more than 25% in after-hours trading on Thursday after closing at $ 16.35.
One bright spot was user growth. According to Snap, daily active users in the second quarter increased 18% to 347 million, more than Wall Street analysts predicted 343 million.
Evan Spiegel, CEO of Snap, admitted that user growth alone is not enough. “Continuous growth of our community increases long-term opportunities for our business, but our performance (quarter) does not reflect our ambitions,” he said in a statement. I did.
Snap is hitting the advertising business with rising inflation, a slowing economy and changes in the industry. Last year, Apple changed its privacy settings to allow users to opt out of tracking by the app. This has made it more difficult for social media companies to make targeted ads.
Snap has regularly forecasted its financial performance for many years. By refusing to do so this time, the company emulates others who have decided not to say much during periods of macroeconomic uncertainty. For example, Apple stopped providing financial guidance early in the pandemic. Twitter, which has been involved in a court battle over the $ 44 billion acquisition with Elon Musk, has also not provided financial guidance.
Jeffreys equity analyst Brent Chill said digital advertising, which accounts for the majority of Snap’s revenue, is often the first to be cut during times of financial difficulty, which is the company’s younger audience Said it could be exacerbated by.
“The biggest factor is the economic recession,” Thill added. “It’s amazing how the environment has changed. Now every headwind is hitting them.”
