Shares in Snap Inc. plunged by over 30% in late trading today after the company fell short on revenue and offered weak guidance for the quarter ahead.

For the quarter that ended Dec. 31, Snap reported adjusted earnings per share of eight cents, down from 14 cents in the same quarter of last year, on revenue of $1.361 billion, up 5% year-over-year. The earnings were a beat, as analysts were expecting a figure of six cents per share, but the revenue was below an expected $1.38 billion.

Snap reported 414 million daily active users in the quarter, up 39 million or 10% from the same quarter of 2022 and ahead of an expected 412 million. However, the average revenue per user was $3.29 versus an expected $3.33.

On an unadjusted basis, Snap reported a net loss of $248 million in the quarter, down from $288 million a year prior. Operating cash flow was $165 million and free cash flow was $111 million. For the full year, Snap reported adjusted earnings per share of nine cents, down from 17 cents a year prior, on revenue of $4.606 billion, up ever so slightly from $4.602 billion in 2022.

Highlights in the quarter included time spent watching Spotlight, Snapchat’s entertainment platform for user-generated content, up 175% year-over-year and Spotlight’s average monthly users increase over 35% year-over-year. Total stories pushed to Stories, a feature that allows users to share their day in a narrative manner, by “Snap Stars” also grew 125% year-over-year in the U.S.

Snapchat+, Snap’s paid premium service that offers exclusive, experimental and pre-release features, passed through 7 million users in the quarter. Those users were also the first to gain access to new artificial intelligence-powered features that are said to help enhance Snaps and to create and send AI-generated images based on a text prompt.

“2023 was a pivotal year for Snap, as we transformed our advertising business and continued to expand our global community, reaching 414 million daily active users,” Chief Executive Evan Spiegel said in the company’s earnings release. “Snapchat enhances relationships with friends, family and the world, and this unique value proposition has provided a strong foundation to build our business for long-term growth.”

For its fiscal first quarter of 2024, Snap expects revenue of $1.095 billion to $1.135 billion and approximately 420 million daily active users. Analysts were looking for revenue of $1.117 billion, while the DAU figure was slightly ahead of an expected figure of 419.3 million.

In a letter to investors, Snap attributed some of its weakness to war in the Middle East. “While we are encouraged by the progress we are making with our ad platform and the improved results we are delivering for many of our advertising partners, we estimate that the onset of the conflict in the Middle East was a headwind to year-over-year growth of approximately two percentage points in Q4,” the letter reads.

The results come one day after Snap announced that it plans to lay off about 500 employees, or 10% of its workforce. The layoffs were described by Snap as a reorganization of its team to “reduce hierarchy and promote in-person collaboration.”

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