Snap Adds Users, Boosts Revenue, Posts $360 Million Loss

Snap has grown daily users to 332 million, an 18 percent increase in Q1 according to an earnings report. The January through March period reflects a 38 percent year-over-year revenue increase, but also documents a net loss of $360 million. The deficit — attributed to digital advertising circumstances including Apple’s new privacy policies, the war in Ukraine and the effects of inflation — comes on the heels of Snap’s first-ever quarterly profit in Q4 2021. The Q1 results reflect “underlying momentum” against “a challenging operating environment,” said Snap CEO Evan Spiegel.

In the Q1 statement, Spiegel pointed to “new products and services” the Santa Monica-based company plans to debut at the Snap Partner Summit on April 28 and says it remains focused on “delivering ROI for our advertising partners, and investing against our enormous opportunity in augmented reality.”

The Wall Street Journal notes that Snap’s Q1 results reflect sales that “narrowly fell short of its forecast and a loss that was wider than Wall Street expected.” Quarterly revenue totaled $1.06 billion versus the $1.07 billion expected, per Refinitiv.

Snapchat’s global daily active users (DAUs) hit 332 million, “versus 330 million expected, according to StreetAccount,” CNBC reports. Snap signaled Q2 sales growth could surpass its forecast. Snap CFO Derek Andersen said so far in April sales are up by about 30 percent, exceeding guidance in the 20-25 percent range for April through June.

“We are concerned that the operating environment ahead could be even more challenging, leading to further campaign pauses or advertiser budget reductions,” Andersen said on the earnings call, adding that “a large number of advertisers” paused spending after Russia’s February 24 attack on Ukraine, but “the vast majority of clients resumed their campaigns within 10 days.”

While pre-invasion revenue was up 44 percent, “the slowdown in the rate of year-over-year growth observed post the invasion of Ukraine” marked deceleration in both direct response and brand advertising, across “many industry verticals,” Anderson explained. Snap incurred roughly $5 million in costs supporting team members affected by the war.

Anderson said Snap has launched its first Snap AR certification on Snap Focus called Augmented Reality Strategies for Advertisers to support campaigns tied to its popular augmented reality filters, and continues to invest in Arcadia, Snap’s global creative studio for branded immersive AR experiences. On average, more than 250 million Snapchatters engaged with its AR each day during Q1, the company says.

“Snap is one of the first tech companies with sales focused on the digital ad market to report results for the January through March period,” writes WSJ, noting “Facebook parent Meta Platforms Inc., Twitter Inc. and Alphabet Inc. all report quarterly results next week.”

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