PvNew | Internet Celebrity Wiki

Snap Misses Already Lowered Q2 Expectations, Says It Will ‘Substantially Slow’ Rate of Hiring

  2024-03-04 varietyTodd Spangler4500
Introduction

Snap reported second-quarter results that came in under analysts’ already reduced expectations — and the company didn’t

Snap Misses Already Lowered Q2 Expectations, Says It Will ‘Substantially Slow’ Rate of Hiring

Snap reported second-quarter results that came in under analysts’ already reduced expectations — and the company didn’t provide Q3 guidance — sending the stock down more than 25% in after-hours trading.

The social messaging and content app company also intends to “substantially slow our rate of hiring, as well as the rate of operating expense growth,” it said in its first quarterly letter to investors. “We will reprioritize our investments and drive a renewed focus on productivity.”

The company reported revenue of $1.11 billion, up 13%, and a net loss of $422 million (an adjusted net loss of 2 cents per share). Wall Street analysts on average expected Snap Q2 revenue to come in at $1.14 billion with a net loss of 1 cent per share, according to Refinitiv.

The company had 347 million average Snapchat daily active users in the period — up 15 million sequentially and an 18% increase from the year-earlier period — topping its previous forecast. However, DAUs in North America grew only 4% year-over-year, to hit an average 99 million in the quarter.

Snap did not provide guidance for Q3 sales or earnings, citing the “uncertainties related to the operating environment.” It said in its investor letter that so far in Q3, revenue is approximately flat on a year-over-year basis.

Click here to sign up for PvNew’s free Strictly Business newsletter covering earnings, financial news, and more.

“While the continued growth of our community increases the long-term opportunity for our business, our financial results for Q2 do not reflect our ambition,” Snap CEO and co-founder Evan Spiegel said in prepared remarks. “We are evolving our business and strategy to reaccelerate revenue growth, including innovating on our products, investing heavily in our direct response advertising business, and cultivating new sources of revenue to help diversify our topline growth.”

In an 8-K filing with the SEC, Snap disclosed that it entered employment agreements with Spiegel and CTO Bobby Murphy through Jan. 1, 2027.

On May 23, Snap had warned in an SEC filing that it expected to miss Q2 revenue and earnings guidance provided one month earlier, saying “the macroeconomic environment has deteriorated further and faster than anticipated.”

In the letter to investors, Snap said “demand growth on our advertising platform has slowed significantly,” saying that in some cases advertisers have lowered their bids per action to reflect their current willingness to pay. In industries with strong topline growth but fast-rising costs, “we have observed reduced marketing spending and lower bids per action,” the company said. In addition, Snap said, in some “high-growth sectors,” businesses are seeing higher costs of capital, which is contributing to lower ad spend.

Another challenge: Snap is seeing “increasing competition for advertising dollars that are now growing more slowly,” the company said.

Snap previously called out factors that it expected to depress ad revenue in Q2, including “inflationary pressures and the impact of rising interest rates” as well as the ongoing impact of Apple’s iOS privacy change that requires users to double opt-in to allow ad tracking.

Snap also announced that its board of directors authorized a stock repurchase program of up to $500 million of its Class A common stock. The goal is to “offset a portion of the dilution related to the issuance of restricted stock units to employees,” the company said.

In announcing Q2 results, the company touted its original content lineup, saying that more than 10 million Snapchat users have watched “The Fight Inside,” featuring boxer Ryan Garcia and his struggles with mental health. The upcoming slate of Snap Originals includes shows with champion gymnast Simone Biles and returning sister-duo Dixie and Charli D’Amelio.In addition, Snap renewed content partnerships with the NFL, WNBA, and NBA for Discover Shows, Spotlight Challenges, AR experiences and Cameos.

Also during the quarter, Snap unveiled Pixy, a $230 camera-equipped flying drone for recording videos and photos for Snapchat. Last month it launched Snapchat+, a $3.99/month service that provides “exclusive, experimental and pre-release features,” including the ability to access Snapchat messaging on the web.

Snap’s Q2 results may be an augur for Twitter, which is set to report second-quarter earnings Friday (July 22) before the market opens but will not hold a conference call because of “the pending acquisition by an entity affiliated with Elon Musk.” meta, parent company of Facebook and Instagram, is scheduled to report Q2 results next Wednesday, July 27, after market close.

(By/Todd Spangler)
 
 
Dislike 0 Report 0 Favorite 0 Awards 0 Comments 0
0 itemsRelated comments
 

(c)2019-2024 PvNew All Rights Reserved |