Shares in Snap Inc. plunged by more than 18% in late trading despite the company beating earnings and revenue expectations in its latest quarter. The problem? Its first outlook in over a year fell short of expectations.

For its second quarter that ended June 30, Snap reported a loss before costs such as stock compensation of two cents per share, down from a loss of four cents in the same quarter of last year, on revenue of $1.068 billion, down 5% year-over-year. Analysts had been expecting an adjusted loss of four cents per share on revenue of $1.05 billion.

Snap’s net loss came in at $377 million, down from $422 million in the previous year. The company’s operating cash flow was negative $82 million, down from negative $124 million in the same quarter last year, and free cash flow was negative $119 million, down from $147 million.

The company saw 397 million daily active users in its second quarter, up 14% year-over-year, with DAUs increasing in North America, Europe and the rest of the world. More than 400 million monthly active users, up 52%, watched Spotlight, Snapchat’s entertainment platform for user-generated content.

Snap’s artificial intelligence-powered chatbot, launched in February, is also finding a willing audience, as more than 150 million users sent in excess of 10 billion messages since its launch.

The surprise accompanying the report was Snap giving an outlook alongside its earnings. For its fiscal third quarter, Snap expects DAUs of 405 million to 406 million and revenue of $1.07 billion to $1.113 billion. Analysts were expecting $1.13 billion in revenue.

The miss on outlook was coupled with warnings from the company that a “rapid transition” of the business could hurt future earnings.

“From a revenue perspective, our business remains in a period of rapid transition as we work to improve our advertising platform, while forward visibility of advertising demand remains limited,” Chief Financial Officer Derek Andersen said on Snap’s earnings call. “I know that we’ve not provided formal guidance since the very beginning of 2022. So it is a big shift for us to begin providing formal guidance again and I think that does reflect an increased confidence in the trajectory of our business.”

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