Snap reported that its loss in the recently ended quarter nearly tripled to $422 million despite revenue increasing 13 percent under conditions "more challenging" than expected.
A hit with young internet users in its early days, ephemeral
messaging app Snapchat has remained a small player in the social networking
space as competition has grown ever more intense.
"We are not satisfied with the results we are
delivering, regardless of the current headwinds," California-based Snap
said in a letter to investors.
The firm pointed to a punishing confluence of increased
competition, slowing growth of its revenue, "upended" advertising
industry standards and macroeconomic woes.
Snap share price was around $12 in after-hours trading in
the wake of the earnings report.
"Competition -- whether it's with TikTok or any of the
other very large, sophisticated players in the space -- has only
intensified," Snap chief financial officer Derek Andersen said on an
earnings call.
"So it's hard to disentangle the numerous factors here
impacting what's clearly a headwind-driven deceleration in our business,"
he added.
The number of people using Snapchat daily grew 18 percent to
347 million from the same quarter a year ago, Snap reported.
Snap last month launched a subscription version of Snapchat
as it looks to generate more money from the image-centric, ephemeral messaging
app.
Trouble on multiple fronts
Snapchat+ is priced at $4 a month and will provide access to
exclusive features. It said that these would include priority tech support and
early access to experimental features.
The subscription version of the service made its debut in
Australia, Britain, Canada, France, Germany, New Zealand, Saudi Arabia, the
United Arab Emirates, and the United States, Snap said.
Snap in February reported its first quarterly profit, but
two months later warned that it saw the economic outlook as having darkened
considerably.
"It's clear that the challenging economic environment
continues to put pressure on Snap's business," said Insider Intelligence
principal analyst Jasmine Enberg.
"Snap is also still reeling from the impact of Apple's
privacy changes, which have disproportionately impacted performance
advertisers, creating a one-two-punch to its entire ad business."
Apple rocked the digital advertising landscape by tightening
privacy controls in the software powering its iPhones, letting users curb the
tracking data used to target ads.
Snap is a small player in the online ad market, accounting
for less than one percent of the money spent worldwide, which makes it more
susceptible to such changes and challenges than internet giants such as
Facebook-parent Meta, Eng said.
"It can be difficult to attribute deceleration to any
one factor," Andersen said. "But in order to keep growing, we've got
to stay focused on the inputs that we control."
Snap a while back recast itself as a "camera
company," fielding offerings such as picture-taking glasses called
Spectacles.
"Long-term the most exciting opportunity is (augmented
reality) and we're investing heavily around the future of AR," Andersen
said.
Meanwhile, the battle for people's attention online grows
increasingly fierce as established titans such as Meta and Google adapt
offerings to changing trends and relative newcomers such as TikTok grab the
spotlight.
Anderson added that Snap intends to effectively pause hiring
and look at reining in other expenses, joining a growing number of tech firms
throttling back costs.
"We intend to substantially slow our rate of hiring to
effectively pause growth in our headcount, which is a significant portion of
our office," he added.