Snap expects lower revenue in first quarter amid increased competition from TikTok, lower ad demand

Snap on Tuesday posted a net loss for the fourth quarter and said revenue could drop as much as 10% in the current quarter as it faces fierce competition from rivals like TikTok and weak advertising demand.

Photo messaging app boss Snapchat is the first major digital advertising platform to report quarterly results, often providing early signals for platforms like Facebook owner meta and Alphabet‘s Google, reporting results this week.

In a letter to investors, Snap said the weakening economy, increased competition from other social media platforms and “platform policy changes” continue to take its toll. for their business.

Apple began rolling out privacy changes on iPhones in 2021. These changes have limited advertisers’ ability to collect data for targeted advertising.

“We expect the headwinds we have faced over the past year to persist throughout Q1,” the company said in a letter to investors.

Snap’s net loss was $288 million (roughly Rs 2,350 cores) for the quarter, down from a net income of $23 million (approximately Rs 190 cores) the previous year. Revenue for the fourth quarter ended December 31 was $1.3 billion (approximately Rs 1,06,000), unchanged from the previous quarter and in line with analyst expectations.

Snap will hold an investor day on February 16 to detail its plans after it announced in August that it would lay off 20% of its staff and stop experimental projects like computers. drone photo to cut costs.

The tech sector has struggled in recent months amid record-high inflation and recession expectations.

Shares of the Santa Monica, California-based company have fallen 65% over the past year.

Daily active users on Snapchat grew 17% year over year to 375 million, beating analyst expectations of 374 million, according to IBES data from Refinitiv.

In a letter to investors, the company said its internal forecast assumes a 2% to 10% fall in first-quarter revenue from a year ago, and said revenue is now down 7% in the quarter. this.

Snap forecasts the number of daily active users for the first quarter will be between 382 million and 384 million.

© Thomson Reuters 2023

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