Snap, the maker of the well-known Snapchat app, announced its quarterly results for Q3 2022. The company did not please investors at all and the stock has already written off more than 29%.
From the results, we can see the slowest quarterly revenue growth and this is even though daily active users increased by 19% year-on-year to 363 million.
Revenue through grew slowly, so year over year we see a 6% increase to $1,128 million.
Operating cash flow was $56 million and free cash flow was $18 million.
Net loss was $360 million, which already includes restructuring charges of $155 million. Here we could see the layoffs in August when the company announced a 20% job cut and the axing of projects that don’t contribute to user growth, revenue, or the company’s augmented reality efforts.
A stock buyback program of up to $500 million was also approved.
CEO Evan Spiegel commented.
“This quarter we took action to further focus our business on our three strategic priorities: growing our community
and deepening their engagement with our products, reaccelerating and diversifying our revenue growth, and investing in augmented reality.”
Results impact other competitors
The current economic slowdown has not been good for companies of this type. That is, companies based largely on ad revenue. Rising inflation is putting pressure on companies and consumers alike, so advertising budgets are gradually being squeezed, which is key for these tech giants.
“We are finding that our advertising partners in many industries are reducing their marketing budgets, particularly in light of unfavorable operating conditions, inflation-driven cost pressures, and rising capital costs.”
The situation is not helped by Apple‘s new rules requiring all apps to have smartphone users’ permission to track them online, which has made it harder for advertisers to measure and manage their ad campaigns. This was reflected in Meta’s outlook, which we covered in a recent article.
Snap’s quarterly results were the first from a group of large Internet companies that depend on advertising, and are an indicator of what investors can expect when larger players like Alphabet and Meta Platforms report next week.