Snap Shares Drop 14% Despite Revenues Climbing By 12%

London, UK - July 30, 2018: The buttons of Snapchat, Facebook, WhatsApp, Twitter and other apps on the screen of an iPhone.

Snap has released its Q4 2022 earnings and, despite the company seeing increased revenue over the year and year-on-year, its share price dropped by 14 per cent as the growth failed to meet analyst expectations.

Analysts were predicting a revenue of US$1.31 billion (around AU$1.86 billion) but Snap missed the target, generating US$1.30 billion (around AU$1.84 billion).

Global daily active users were just 300,000 short of analysts’ expectation at 375 million and the average revenue per user was US$3.47, compared to $3.49 expected (AU$4.92 versus AU$4.95).

In a letter to investors, the company remained positive, citing its still strong year-on-year revenue and user growth.

“Despite the challenging operating environment, we made significant progress building our business in 2022. We continued to drive strong growth in our community, ending the year with 375 million daily active users (DAU) in Q4, an increase of 17% year-over-year. For the full year, we generated $4.6 billion of revenue, up 12% year-over-year, reflecting the rapid deceleration in digital advertising growth.”

Snap’s results mark the start of Q4 earnings season for the world’s big tech companies. Meta reports its earnings tomorrow, while Google parent Alphabet and Amazon report on Thursday.

In the wake of Snap’s results, Meta’s shares dropped by 2 per cent and Pinterest fell by almost 5 per cent, ahead of its reporting next week.

However, Snap said that it is continuing to improve its content monetisation opportunities and diversify its revenue streams away from purely advertising with its Snapchat+ service which offers early access to new features.

“Snapchat+, which grew to more than 2 million subscribers in the quarter. In Q4, we launched new features for Snapchat+ subscribers, including Custom Story Expiration, Custom  Notification Sounds, Camera Colour Borders, and Bitmoji Backgrounds. While it is still early, we are focused on improving our subscription funnel from awareness to conversion and providing more value to subscribers with new feature drops,” the company said.

The company also maintained that its TikTok-rivalling feature, Spotlight, is growing in popularity.

“Total time spent watching Spotlight content grew over 100% year-over-year, and Spotlight monthly active users grew more than 30% year-over-year in Q4. We’re excited about the potential for Spotlight to deliver increased depth of engagement to our platform over the long term,” it said.

“Daily Spotlight submissions are up nearly 20% year-over-year in Q4. We are also excited about the monetization opportunity for Spotlight and continue to expand our advertising testing to optimize the advertising experience within Spotlight for our community and advertising partners.”

Snap also boasted about the growth of its AR lenses, which can allow shopping opportunities and its content partnerships with TV networks and publishers from around the world. In typical Snap fashion, the company also reminded investors that 75 per cent of 17-25 year olds use the platform.

Of course, investors don’t care for content partnerships and young users, they want results. By missing its targets, albeit narrowly, and failing to turn a profit coupled with troubling economic headwinds and Apple’s continued privacy push, Snap received another round of bad results.




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