Co-founders Evan Spiegel and CEO and CTO Bobby Murphy have agreed new employment contracts that will keep them in their jobs until at least January 2027.
Here’s how the company did:
- Earnings per share: a loss of 2 cents, adjusted, versus an expected loss of 1 cent, according to a Refinitiv survey of analysts
- he won: $1.11 billion vs. $1.14 billion forecast, according to Refinitiv
- Global Daily Active Users (DAUs): 347 million vs. 344.2 million expected, according to StreetAccount
In the investor letter, Snap said it was not providing guidance for the third quarter because “the outlook remains very challenging.” The company said revenue in the period to date was “almost flat” compared to the previous year. Analysts expected sales growth of 18% for the third quarter, according to Refinitiv.
“We are not satisfied with our results, regardless of current headwinds,” the company said in the letter.
It’s the latest chapter in a difficult year for Snap, whose stock lost nearly two-thirds of its value in 2022. In May, Snap said it would not meet second-quarter guidance it set the previous month, sending a 43% plunge in the stock price. At the time, Snap noted that the macroeconomic environment was deteriorating much faster than expected.
Even with the guidance down, Snap still beat estimates. Revenue increased 13% from last year, while analysts expected 16% growth.
“The second quarter of 2022 was more difficult than we expected,” Snape said in the investor’s letter. The company said it now plans to “significantly slow the rate of hiring, as well as the growth rate of operating expenses.”
Snap attributed its disappointing results to slowing demand for its online advertising platform. In addition, a challenging economy, Apple’s iOS 2021 update and increased competition from companies like TikTok, have put marketers back from spending.
Snap said that even some relatively healthy companies were limiting their liabilities due to “input cost pressure due to inflation.”
“In some high-growth sectors, companies are reassessing investment levels amid a rising cost of capital, which is further reflected in campaign budgets and the level of bid-per-action,” Snape said.
Snap also announced a share buyback program of up to $500 million. For their new employment contracts, Spiegel and Murphy will receive a $1 annual salary and no equity compensation.
Earlier this week, Snap first launched Snapchat for web, a desktop version of the Snapchat mobile app that people can use to send messages and make video calls with their Snap contacts.
Snap unveiled a new desktop app shortly after it rolled out its Snapchat+ paid subscription plan, which costs $3.99 per month and lets people access early features and see who has viewed their Snaps.
Investors will soon get a clearer picture of the online advertising environment. Twitter is set to announce the results Friday morning, followed by Alphabet and Meta next week.
Meta and Pinterest shares were down 5% in after-hours trading on Thursday, while Alphabet shares were down 2.9% and Twitter was down 1.5%.
Snap’s market capitalization peaked at $136 billion in September. Based on after-hours pricing, the company is now valued at $20 billion.
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