UPDATED 20:02 EDT / APRIL 21 2022

APPS

Snap slightly misses on earnings thanks to difficult macroeconomic conditions

Shares in Snap Inc. share went on a rollercoaster ride in late trading today after only slightly missing analysts’ expectations for its latest quarterly earnings.

For the quarter ended March 31, Snap reported a loss before costs such as stock compensation of two cents per share, worsening from breakeven in the same quarter of last year and a one-cent-per-share profit in the previous quarter. Revenue rose 38%, to $1.06 billion. Analysts had expected an adjusted loss of one cent per share on revenue of $1.07 billion.

Snap’s lower-than-expected numbers were the result of lower average revenue per user, which it blamed on difficult macroeconomic conditions, including advertisers pausing campaigns following the Russian invasion of Ukraine.

The average revenue per user came in a $3.20 in the month, up 17% from a year ago but lower than the expected $3.25. Global daily active users grew 18% year-over-year, to 332 million, ahead of the 330 million expected by analysts.

Operating cash flow in the quarter came in at $127 million, down from $137 million the prior year, while free cash flow came in at $106 million, down from $126 million a year ago.

Highlights in the quarter included more than 250 million Snapchat users engaging with augmented reality every day on average. The company’s Valentine’s Day Lenses were viewed more than 9 billion times, more than twice as much as last year.

Known for its younger audience, Snapchat nonetheless said engagement by users aged 25 and over with shows and publisher content rose by more than 25% year-over-year, and 10 million viewers watched “Breakwater,” a Snap Original about a dystopian future.

“Our first-quarter results reflect the underlying momentum in our business through a challenging operating environment, Evan Spiegel, chief executive officer of Snap, said in a statement. “We remain focused on providing value for our growing community, delivering ROI for our advertising partners and investing against our enormous opportunity in augmented reality.”

Looking forward, Snap predicted adjusted earnings before interest, taxation, depreciation and amortization of between breakeven and $50 million in its second quarter on year-over-year revenue growth of between 20% and 25%.

The headline figures may have been a narrow miss for Snap, but investors ultimately were not harsh on the company. Snap shares were down as much as 7% after the earnings release, then flipped around and rose nearly 5%. The price subsequently settled, with Snap up a little under a percentage point by about 8 p.m. EDT.

Barrons reported that Snap’s results might reflect what to expect as earnings season kicks off for the social media industry. Shares in Meta Platforms Inc. and Twitter Inc. rose slightly after Snap’s results were released.

Image: Blogtrepreneur/Flickr

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