Snap Inc. CEO Evan Spiegel arrives for a morning session at the Allen & Company Sun Valley Conference July 7, 2021 in Sun Valley, Idaho.
Kevin Dietsch | Getty Images
Snap missed Wall Street expectations for earnings and revenue and forecast disappointing revenue growth in the current quarter when it reported first-quarter results on Thursday. However, the number of daily users grew by 18% annually, more than expected.
Snap was down about 4% at one point before rebounding and up over 7% at one point in volatile extended trading.
Here are the key numbers:
- earnings per share: A 2 cent loss versus a 1 cent expected gain, according to a Refinitiv poll of analysts
- revenue: $1.06 billion versus expectations of $1.07 billion, according to Refinitiv
- Daily Active Users Worldwide (DAUs): 332 million vs. 330 million expected according to StreetAccount, up 18% year-on-year
- Average revenue per user (ARPU): $3.20 vs. $3.25 expected, according to StreetAccount, up 16.8% year-on-year
“Q1 2022 proved more challenging than we anticipated,” Snap CEO Evan Spiegel said in a prepared statement.
Spiegel blamed macroeconomic conditions for some of Snap’s woes during the quarter, including advertisers pausing their campaigns following the Russian invasion of Ukraine in February.
Snap said it expects revenue to rise between 20% and 25% in the June quarter, below Wall Street’s estimate of 28%. It forecasts around 344 million daily users, ahead of expectations of 341.4 million.
The Company estimates that second quarter Adjusted EBITDA will be between breakeven and $50 million.
Though the company’s overall revenue is up 38% year over year, Snap reported a larger net loss and lower free cash flow on an annualized basis for the quarter ended March.
Snap CFO Derek Andersen said other conditions affecting advertisers include supply chain disruptions, labor shortages, inflation and the impact of rising interest rates.
Snap could continue to face a challenging operating environment, prompting clients to pause their campaigns or cut advertising budgets, Andersen said in his prepared remarks.
Snap also faces challenges related to Apple’s 2021 privacy change, which makes it more difficult to target and measure ads on iPhones. Andersen said the tool the company developed to improve the problem now accounts for 90% of the company’s direct-response advertising revenue.