Snap shares fall over 25% on revenue miss, no fourth-quarter outlook

Snap shares fall as surprise outlook falls short of expectations

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Shares in Snap Inc. fell by over 18% in late trading despite the company beating earnings and revenue expectations in its latest quarter after its first outlook in over a year fell short of expectations.

For the quarter that ended June 30, Snap reported a non-generally accepted accounting principles loss of two cents per share, down from a loss of four cents in the same quarter of last year, on revenue of $1.068 billion, down 5% year-over-year. Analysts had been expecting an earnings per share loss of four cents on revenue of $1.05 billion.

Snap’s net loss came in at $377 million, down from $422 million in the previous year. The company’s operating cash flow was negative $82 million, down from negative $124 million in the same quarter last year and free cash flow was negative $119 million from $147 million.

The company saw 397 million daily active users in its second quarter, up 14% year-over-year, with DAUs increasing in North America, Europe and the rest of the world. Over 400 million monthly active users watched Spotlight, Snapchat’s entertainment platform for user-generated content, up 52%.

Snap’s artificial intelligence-powered chatbot, launched in February, is also finding a willing audience, with over 150 million users sending over 10 billion messages since its launch.

The surprise accompanying the report was Snap giving an outlook alongside its earnings. For its fiscal third quarter, Snap expects DAUs of 405 million to 406 million, on revenue of $1.07 billion to $1.113 billion. Analysts were expecting a forecast of $1.13 billion.

The miss on outlook was coupled with warnings from the company that a “rapid transition” of the business could impact future earnings.

“From a revenue perspective, our business remains in a period of rapid transition as we work to improve our advertising platform, while forward visibility of advertising demand remains limited,” Chief Financial Officer Derek Andersen said on Snap’s earnings call. “I know that we’ve not provided formal guidance since the very beginning of 2022. So it is a big shift for us to begin providing formal guidance again and I think that does reflect an increased confidence in the trajectory of our business.”

Photo: Unsplash

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