Shares in Snap Inc. plunged about 18% in late trading today after the company missed on revenue in its fiscal 2024 second quarter and fell short of third-quarter adjusted earnings guidance.

For the quarter that ended on June 30, Snap reported adjusted earnings per share of two cents, up from a loss of two cents in the same quarter of fiscal 2023, on revenue of $1.237 billion, up 16% year-over-year. Earnings were in line with analyst expectations, but revenue fell slightly short of an expected $1.25 billion.

Though Snap may have fallen short on its revenue figure, overall fundamentals were fairly solid as the company behind Snapchat is still losing money, but less than it did a year prior. In the quarter, Snap reported an operating loss of $254 million, down from $404 million in the same quarter of last year, while the company’s net loss of $248 million was down from $377 million the year prior. Net cash provided by and used in operating activity was a loss of $21 million versus $82 million in the second quarter of 2023.

The key to changing its profit direction is customer growth and Snap saw an increase in daily active users to 432 million, up 36%, or 9% year-over-year. The company also hit a milestone in the quarter, reaching more than 850 million monthly active users.

Another source of revenue for Snap, its premium Snap+ subscription service, hit 11 million in the quarter, up from nine million in the second quarter. Snap+ offers premium features including story rewatching, custom icons and priority support for $3.99 per month.

Product highlights in the quarter included the launch of AR Extensions, a service that allows advertisers to integrate AR Lenses and Filters directly into all Snapchat ad formats. Snap also announced that advertisers can now leverage generative artificial intelligence technology, such as the company’s ML Face Effects, to create custom-sponsored AR Lenses.

A Snapchat lens is an augmented reality filter that users and advertisers can apply to their photos and videos to add animated effects, interactive elements and transformations to their images in realtime.

For users, Snap continues to invest in AI. Its generative AI models and automation are driving the creation of ML and AI Lenses, such as the generative AI lens Scribble World, which was viewed more than 1 billion times, and the 90’s AI lens, which captivated more than 20% of U.S. Snapchatters. Snap also launched Lens Studio 5.0, featuring a new generative AI Suite that simplifies Lens Studio by enabling creators to generate a variety of Lens-ready assets with just a prompt and no coding required.

“Our community grew to reach more than 850 million monthly active users in Q2, with more than 11 million Snapchat+ subscribers,” Chief Executive Evan Spiegel said in the company’s earnings release. “We continued to scale our advertising platform with active advertisers more than doubling year-over-year.”

For its fiscal 2024 third quarter, Snap said it expects daily active users of approximately 441 million, revenue of between $1.335 billion to $1.375 billion, and adjusted earnings of $85 million. It was that last outlook that concerned investors, as analysts had been expecting $109.9 million.

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