Snap, the maker of the messaging app Snapchat, on Tuesday posted its slowest-ever rate of quarterly growth and projected that its sales for the present quarter would fall, in one other sign of the tech industry’s slowdown.
Revenue was $1.3 billion for the fourth quarter, up 0.1 percent from a yr earlier. The corporate also swung to a net lack of $288 million, as spending increased nearly 20 percent from a yr earlier. Snap had reported its first and only quarterly profit as a public company a yr ago.
Snap’s challenges seem like mounting. In a letter to investors, the corporate said revenue to this point in the present quarter had declined 7 percent from a yr earlier. It added that its internal forecasts for the present quarter assumed that revenue would fall between 2 percent and 10 percent, which can be its first revenue drop as a public company.
In an earnings call, Evan Spiegel, Snap’s chief executive, said that “promoting demand hasn’t really improved, nevertheless it hasn’t gotten significantly worse.” He had earlier added in an announcement that Snap continued to “face significant headwinds as we glance to speed up revenue growth.”
The corporate’s shares plunged greater than 14 percent in after-hours trading on Tuesday. Last yr, Snap’s share price fell greater than 80 percent.
The outcomes cap a difficult yr for Snap, with little relief ahead. Persistent inflation and high rates of interest have made advertisers — the corporate’s important income — reluctant to spend, while privacy changes by Apple have made it tougher for social media corporations to trace and goal users of their mobile promoting.
TikTok has also stolen promoting business from Snap and other platforms. The Chinese-owned video app, which Snap has called certainly one of its “very large and really sophisticated competitors,” has attracted brands with its reach and cultural cachet, particularly amongst young people.
Digital promoting has slumped together with the worldwide economy. But Snap has struggled greater than its rivals because advertisers are likely to begin budget cuts with smaller corporations, as a substitute of juggernauts like Facebook and Instagram, said Kelsey Chickering, a principal analyst at Forrester. In August, Snap laid off 20 percent of its employees, discontinued at the very least six products and lost several executives.
“Marketers are nervous about their economic outlook,” Ms. Chickering said. “They’re moving their budgets into places which are proven to be effective.”
One potential vibrant spot for Snap was its user growth, with day by day lively users increasing 17 percent, to 375 million within the fourth quarter. Even so, that was barely lower than the 378 million users that Wall Street analysts had predicted.
Within the earnings call on Thursday, Derek Andersen, Snap’s chief financial officer, said the corporate could still grow its promoting business through features like its TikTok clone, Highlight. But, he added, advertisers had to make use of those features.
“Demand is the lacking portion of things,” he said.
