Snap posted a fourth-quarter net loss on Tuesday and said current-quarter revenue could fall as much as 10 percent as it faces stiff competition from rivals like TikTok and weak ad demand.
The owner of the photo messaging app Snapchat is the first of the major digital advertising platforms to report quarterly results, which often provide an early signal for platforms such as Facebook owner Meta And alphabet‘s Google reporting results this week.
In a letter to investors, Snap said a flagging economy, increasing competition from other social media platforms, and “platform policy changes” continued to hurt the business.
Apple began rolling out privacy changes to iPhones in 2021, limiting advertisers’ ability to collect data for targeted advertising.
“We expect the headwinds we have faced over the past year to continue throughout the first quarter,” the company said in a letter to investors.
Snap’s net loss for the quarter was US$288 million (about Rs.2,350 billion), compared to a net profit of US$23 million (about Rs.1.9 billion) a year earlier. Revenue for the fourth quarter ended December 31 was US$1.3 billion (approximately Rs.1,06,000), flat from the same quarter last year and in line with analysts’ expectations.
Snap will host an investor day on Feb. 16 to outline its plan to move forward after announcing in August it would lay off 20 percent of its employees and halt experimental projects like a drone camera to cut costs.
The technology sector has been hit by record high inflation and recession expectations in recent months.
Shares of the Santa Monica, California-based company have fallen 65 percent over the past year.
The number of daily active users on Snapchat rose 17 percent year-over-year to 375 million, beating analysts’ expectations of 374 million, according to Refinitiv IBES data.
In its letter to investors, the company said its internal guidance called for a 2% to 10% decline in revenue in the first quarter compared to a year ago, and said revenue for the quarter to date is currently down 7%.
Snap forecasts daily active users of between 382 million and 384 million for the first quarter.
© Thomson Reuters 2023
