SAN FRANCISCO, July 22 — Shares of Snapchat-parent Snap lost a quarter of their value in after-hours trades on Thursday following release of dismal quarterly earnings figures.
Snap reported that its loss in the recently ended quarter nearly tripled to US$422 million (RM1.8 billion) despite revenue increasing 13 per cent under conditions “more challenging” than expected.
“We are not satisfied with the results we are delivering, regardless of the current headwinds,” California-based Snap said in a letter to investors.
Snap share price was around US$12 in after-hours trading in the wake of the earnings report.
Snap told investors that policy changes have “upended” advertising industry standards while macroeconomic woes have disrupted industries that buy Snapchat advertising.
“We are also seeing increasing competition for advertising dollars that are now growing more slowly,” Snap said. “Our revenue growth has substantially slowed, and we are evolving our business and strategy to adapt.” The number of people using Snapchat daily grew 18 per cent to 347 million from the same quarter a year ago, Snap reported.
Snap last month launched a subscription version of Snapchat as it looks to generate more money from the image-centric, ephemeral messaging app.
Trouble on multiple fronts
Snapchat+ is priced at US$4 a month and will provide access to exclusive features. It said that these would include priority tech support and early access to experimental features.
The subscription version of the service made its debut in Australia, Britain, Canada, France, Germany, New Zealand, Saudi Arabia, the United Arab Emirates, and the United States, Snap said.
Snap in February reported its first quarterly profit, but two months later warned that it saw the economic outlook as having darkened considerably.
“It’s clear that the challenging economic environment continues to put pressure on Snap’s business,” said Insider Intelligence principal analyst Jasmine Enberg.
“Snap is also still reeling from the impact of Apple’s privacy changes, which have disproportionately impacted performance advertisers, creating a one-two-punch to its entire ad business.” Apple rocked the digital advertising landscape by tightening privacy controls in the software powering its iPhones, letting users curb the tracking data used to target ads.
Snap is a small player in the online ad market, accounting for less than one per cent of the money spent worldwide, which makes it more susceptible to such changes and challenges than internet giants such as Facebook-parent Meta, Eng said.
“It can be difficult to attribute deceleration to any one factor,” Snap chief financial officer Derek Andersen said on an earnings call. “But in order to keep growing, we’ve got to stay focused on the inputs that we control.” — AFP