Snap announced plans to “substantially reduce” hiring and shake up its strategy as it posted bleak second-quarter results, blaming tough macroeconomic conditions but also stating it was “not satisfied with the results ... regardless of the current headwinds”.
The social media company lost about a quarter of its value on Thursday after posting the results, which chief executive Evan Spiegel said “do not reflect our ambition”.
Revenues at the Los Angeles-based social media company increased 13 per cent to $1.11 billion (€1.08 billion) in the three months to the end of June, just shy of analysts’ consensus of $1.13 billion.
Net losses widened by 178 per cent compared with the same period last year to $422 million — far greater than analyst estimates of losses of $340 million, according to data compiled by S&P Capital IQ.
The company had issued an unexpected warning in May that the pace of revenue growth would come in below its initial guidance of between 20 per cent and 25 per cent, citing a rapidly deteriorating macroeconomic environment.
Mr Spiegel said Snap planned to focus on product innovation, diversifying revenue and investment in its direct response advertising business in order to address the slowdown.
In a letter to investors on Thursday, Snap said that brands were slashing digital advertising budgets due to the wider economic slowdown and inflationary pressures, as well as privacy changes by Apple that have made it harder to target advertising and measure the success of campaigns.
It also said business had been hurt by increased competition as entrants such as Chinese-owned TikTok take market share.
Daily active users rose 18 per cent to 347 million in the quarter, it said.
Snap’s shares fell about 25 per cent to $12.33 on news of its results.
Separately, it said it had authorised a stock repurchase programme of up to $500 million of its class-A common stock. Snap also said Mr Spiegel and co-founder and chief technology officer Bobby Murphy had entered into long-term employment agreements with the company. They will serve in their respective roles until at least January 1st, 2027 on an annual salary of $1. — Copyright The Financial Times Limited 2022