Snap shares tumbled over 17% after the company reported guidance for its current quarter that missed analysts’ expectations.
Here’s how the company did:
- Loss per share: 2 cents vs. 4 cents expected by analysts, according to Refinitiv.
- Revenue: $1.07 billion vs. $1.05 billion expected, according to Refinitiv.
- Global Daily Active Users (DAUs): 397 million vs. 394.9 million expected, according to StreetAccount.
- Average revenue per user: $2.69 vs. $2.68 expected, according to StreetAccount.
Snap reported second-quarter results that topped analysts’ estimates but provided a weaker-than-expected forecast for the current period.
The company’s overall sales in the second quarter declined 4% from the $1.11 billion it logged in the previous year during the same period. It’s the second straight period of declining year-over-year revenue.Â
The social messaging business managed to narrow its net loss by 11% to $377.3 million, or 24 cents per share, in its second quarter, which ended June 30, 2023, from $422.1 million, or 26 cents, during the year-earlier period.
Snap also issued financial guidance for the third quarter that it says is “built on the assumption” that the company’s daily active users will reach between 405 million and 406 million. As part of its guidance, Snap expects between $1.07 billion and $1.13 billion in total sales for the third quarter, which it said implies “negative 5% to flat year-over-year growth.”
Analysts were projecting Snap to report third-quarter sales of $1.13 billion along with 406 million daily active users in the same period.
Last quarter, Snap did not provide official guidance for the second quarter, instead disclosing an “internal forecast” for revenue estimates in the time period.
Like many tech companies, Snap initiated a major cost-cutting plan in 2022 that included laying off 20% of the company’s overall workforce of 6,400 at the time. Because of these cuts, Snap wrote in a Tuesday letter to investors that its operating expenses shrank 8% year-over year in the second quarter, reaching $615 million. As of June 30, 2023, the company had 5,286 full-time workers, according to the letter.
“We are excited by the progress we have made delivering increased return on investment for our advertising partners, growing our community to 397 million daily active users, and reaching more than 4 million Snapchat+ subscribers,” Snap CEO Evan Spiegel said in a statement.
Snap announced its Snapchat+ subscription plan in June 2022, pitching it as a way for users to access exclusive features and updates for a monthly fee of $3.99.
Analysts are following Snap’s earnings for any signs of a recovery in the digital advertising market, which could be experiencing a modest rebound, according to several industry surveys. A recent William Blair survey, for instance, noted that while the overall online advertising market “is still soft,” the overall macro economy is “not as volatile, leading to a slow rebound in digital ad spend.”
Facebook parent Meta reports its second-quarter results on Wednesday, following the company’s first quarterly increase in revenue after three straight periods of decline. At the time, Chief Financial Officer Susan Li said the company would still be experiencing “a volatile macro environment” for the rest of the year, in addition to a “challenging regulatory environment.”
Snap executives will address analysts and investors on an earnings call beginning at 5:30 p.m. ET.
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This story originally appeared on CNBC
