Snap reverses result to loss and expects lower revenue in the 1st quarter
THE Snap on Tuesday reported a net loss for the fourth quarter and said revenue could fall in the current quarter by as much as 10% as it faces stiff competition from rivals such as TikTok and weak advertising demand.
The creator of the Snapchat app is the first of the major digital advertising platforms to release quarterly results and the balance sheet usually indicates signs of the performance of rivals such as Goal and Google (GOOGL), which publish their numbers this week.
In a message to investors, Snap said a weakened economy, increased competition from other social media platforms and “platform policy changes” continued to hurt its business.
Apple implemented privacy protection tools on iPhones in 2021 that limited advertisers’ ability to collect data for targeted advertising.
“We expect the headwinds we faced last year to persist through the first quarter,” the company said.
Snap’s net loss was $288 million for the quarter compared with net income of $23 million a year earlier. Fourth-quarter revenue was $1.3 billion, flat from a year earlier and in line with analyst expectations.
Snap will host an investor event on Feb. 16 to flesh out its business plan after announcing in August layoffs of 20% of its staff and the end of experimental projects that included a photo drone.
Daily active users on Snapchat rose 17% year-on-year to 375 million, compared with analyst expectations of 374 million, according to data from Refinitiv.
In the message to investors, the company said its forecast for the first quarter assumes a revenue decline of 2% to 10% over a year earlier. According to the company, revenues for the period so far show a 7% drop.
Snap predicts that daily active users in the first quarter will be between 382 million and 384 million.
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