Snapchat founder and CEO Evan Spiegel attends a session during the Viva Technology trade show in Paris on June 17, 2022.
Eric Piermont | AFP | Getty Images
Break Shares fell 13% in extended trading on Tuesday after the social media company reported fourth-quarter revenue below analysts’ estimates.
Here’s how the company did it:
- Earnings per share: $0.14, adjusted, vs. $0.11 expected, according to Refinitiv analyst survey
- Returned: $1.30 billion vs $1.31 billion expected, according to Refinitiv
- Global Daily Active Users (DAU): 375 million against 375.3 million expected, according to StreetAccount
- Average revenue per user: $3.47 vs $3.49 expected, according to StreetAccount
Revenue for the quarter was up slightly a year earlier. Like social media peers Meta and Twitter, Snap had a tough 2022 as the slowing economy led companies to cut their digital advertising budgets and Apples iOS privacy update has limited targeting capabilities.
In a letter to investors, Snap called it a “challenging year” marked by “macro headwinds, shifts in platform policy and increased competition.”
For the full year, sales rose 12% to $4.6 billion in 2022. In its earnings statement, Snap said it would not provide guidance for the next period. However, in the letter to investors, the company said its “internal forecast” assumed a decline of 2% to 10% from the previous year. Analysts had expected a slight increase in revenue.
“On the monetization side, we expect the operating environment to remain challenging as we expect the headwinds we have faced over the past year to persist through the first quarter,” the company said in a statement. the letter.
It’s a worrying start to the fourth-quarter earnings season for ad-supported internet companies. Investors will get a clearer picture of the state of the online advertising market later this week. Facebook’s parent company Meta releases fourth-quarter results on Wednesday, followed by Alphabet and Amazon Thursday.
Meta shares fell 2% after Snap’s report. pinterestwhich reports its results next week, fell nearly 5%.
Snap’s stock fell 81% last year as the Nasdaq suffered its worst year since 2008. The stock recouped some of its losses, rising 29% in January, alongside a broader rally in technology.
Snap said it is refocusing its investments to focus on growing its community and engagement, accelerating and diversifying its sales growth and developing augmented reality technologies.
The company said its Snapchat+ service now had more than 2 million paying subscribers in the fourth quarter. Snap launched its subscription service last summer, pitching it as a way for users to access pre-release and exclusive features for $3.99 per month.
As executives repeatedly told analysts last year, the company’s online advertising platform was designed to be easy to use and allow brands to launch campaigns quickly. But its simplicity also meant companies could quickly pause campaigns, which had a big impact on Snap’s finances.
Snap announced in August that it would lay off 20% of its workforce of more than 6,000 employees. The company also shelved several projects during the year, including its photo-taking drone and premium Snap Originals shows.
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