Snap Inc. CEO Evan Spiegel walks to a morning session at the Allen & Company Sun Valley Conference on July 7, 2021 in Sun Valley, Idaho.
Kevin Dietsch | fake images
Break missed Wall Street’s earnings and sales expectations, and forecast disappointing revenue growth in the current quarter, when it reported first-quarter results on Thursday. However, daily users grew 18% annually, more than expected.
Snap was down about 4% at one point before recovering to rise more than 7% at a time in volatile extended trading. It ended up going up less than 1%.
These are the key numbers:
- earnings per share: A loss of 2 cents vs. expected gains of 1 cent, according to a Refinitiv analyst survey
- Income: $1.06 billion vs. $1.07 billion expected, according to Refinitiv
- Global Daily Active Users (DAU): 332 million vs. 330 million expected, according to StreetAccount, up 18% year over year
- Average revenue per user (ARPU)): $3.20 vs. $3.25 expected, according to StreetAccount, up 16.8% year over year
“The first quarter of 2022 turned out to be more challenging than we expected,” Snap CEO Evan Spiegel said in a prepared statement.
Spiegel blamed some of Snap’s problems during the quarter on macroeconomic conditions, including advertisers halting their campaigns after the Russian invasion of Ukraine in February.
Snap said it expected June quarter revenue to rise 20% to 25%, below Wall Street’s estimate of 28%. He forecasts daily users at around 344 million, above expectations of 341.4 million.
The company said it estimates adjusted EBITDA to fall to between breakeven and $50 million in the second quarter.
While the company’s overall revenue was up 38% year-over-year, Snap reported a higher net loss and lower free cash flow on an annual basis for the quarter ending March.
Snap Chief Financial Officer Derek Andersen said other conditions affecting ad clients include supply chain disruptions, labor shortages, inflation and the impact of rising interest rates.
Snap could continue to face a challenging operating environment that is leading clients to pause their campaigns or reduce ad budgets, Andersen said in prepared remarks.
Snap also faces challenges related to Apple’s 2021 privacy change that makes it harder to target and measure ads on iPhones. Andersen said the tool the company created to improve the problem now accounts for 90% of the company’s direct response advertising revenue.
Snap said that without a $92 million unrealized loss related to an investment it previously made that became public last year, the company’s net income would have improved 7% year over year. A Snap representative declined to name the investment.