Snapchat now has 363 million daily active users, an increase of 16 million in three months, but they are driving ever-lower revenue for the struggling social network. Its quarterly results on Thursday sent shares plummeting 25% in electronic trading after the New York Stock Exchange closed.
The platform disappointed with revenue of $1.1 billion, slightly below market expectations, and a net loss of $360 million, quadrupling year-over-year, in part due to an exit plan decided two months ago. Revenue per user, a key indicator of social networks, was $3.11, the lowest level since the beginning of 2021.
Evan Spiegel, head of the American group, claimed to have gained members and brought forward “unstable macroeconomic environment“. Inflation and rising interest rates are limiting spending for advertisers, who are finding refuge on established platforms such as Google, YouTube, Facebook and Instagram, or embracing the hugely popular social network TikTok.
Gaining users in all regions of the world
“Snap has been selling ad space for eight years, but many brands still don’t understand the network and put it in their pilot budgets.notes Jasmine Enberg of Insider Intelligence. “It doesn’t help that Snap has staked its future on augmented reality, which has promising long-term potential but remains a niche ad format that’s easy to cut when budgets are tight.“, he added.
The app claims it has gained users in all regions of the world, including North America and Europe, where some competitors are facing the onset of saturation. He also notes that they spend more time on certain formats, such as “in the center of attention“, a public stream of user-generated content modeled after TikTok.
“This quarter, we took action (…) on our three strategic priorities: growing our community and their engagement with our products, re-accelerating and diversifying our revenue growth, and investing in augmented reality.Evan Spiegel was quoted as saying in the press release.
The group, which has never produced an annual net profit, had to issue a warning on the results in May and said itself:not satisfiedits second quarter results in July. In August, Evan Spiegel announced a restructuring of the group that resulted in the elimination of approximately 20% of the workforce, or more than 1,200 employees.
Source: Le Figaro
I am David Wyatt, a professional writer and journalist for Buna Times. I specialize in the world section of news coverage, where I bring to light stories and issues that affect us globally. As a graduate of Journalism, I have always had the passion to spread knowledge through writing.