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Snap Announces Increased User Growth Despite ‘Challenging’ Q1 2022

UTC by Ibukun Ogundare · 3 min read
Snap Announces Increased User Growth Despite ‘Challenging’ Q1 2022
Photo: Depositphotos

In addition to its poor performance in 2022 Q1, Snap also reported a substantial net loss.

Snapchat’s parent company Snap Inc (NYSE: SNAP) jumped as much as 12% in extended trading after the company reported 2022 Q1 user growth that exceeded analysts’ expectations. The Snapchat app is growing more popular by the day, especially among young people who explore its unique features. Apart from sending disappearing messages, users also get to use special effects for pictures and videos. Last quarter, Snap recorded 322 million daily active users (DAUs).

The increased DAUs is 18% higher than users recorded during the same quarter in 2021. Earlier estimates for Snap’s daily active users were 330.5 million. Snap is obviously amassing more gains than its rival Meta Platforms (NASDAQ: FB). A Bloomberg Intelligence analyst Mandeep Singh said Snap is “still healthy” among its peers.

Snap Reports 2022 Q1 Performance

According to the quarterly report, Snap missed Wall Street estimates for profits and sales in 2022Q1. The company reported a loss per share of 2 cents, while analysts expected earnings per share of 1 cent. Snap said revenues realized in 2022 Q1 were $1.06 billion, lower than the $107 billion predictions. In addition, the average revenue per user was $3.20, lesser than the $3.25 expected.

CEO Evan Spiegel acknowledged that 2022 Q1 was “more challenging” than what the company envisioned. The CEO partially tied the challenges to the Russian invasion of Ukraine. Spiegel explained that some advertisers suspended their campaigns as the war started in February.

The American multimedia service provider is not expecting to see revenue growth in the company quarter. Just as Snap saw a disappointing revenue in 2022 Q1, the company expects the same in Q2. Expectations are that the quarterly revenue for the current quarter will increase between 20% to 25%. Meanwhile, Wall Street’s estimates say 28%. However, Snap is optimistic that its daily users in Q2 will be around 344 million, higher than expectations of 341.4 million.

In addition to its poor performance in 2022 Q1, Snap also reported a substantial net loss. The company also said it experienced less free cash flow on an annual basis during the last quarter. Chief financial officer Derek Andersen mentioned other factors affecting the company’s growth. They are labor shortages, inflation, the negative effect of rising interest rates, and supply chain disruptions. The CFO added that advertising customers may halt campaigns or lower their budgets, resulting in more challenges for the company.

Snap Faces Challenges from Apple’s Privacy Update

Furthermore, Snap suffers from the privacy changes Apple Inc (NASDAQ: APPL) introduced last year. The change makes it more difficult for Snap to measure ads on iPhones.

Still in after-hours trading, Snap stock is up 0.68% to $29.62. Snap Inc. has been seeing steady declines for the past year. The company has lost over 48% in a year and 37.44% since the beginning of this year. Also, SNAP dropped 15.92% in the last three months, 20.59% over the past month, and 11/36% in the last five days.

Business News, Market News, News, Stocks, Wall Street
Ibukun Ogundare

Ibukun is a crypto/finance writer interested in passing relevant information, using non-complex words to reach all kinds of audience. Apart from writing, she likes to see movies, cook, and explore restaurants in the city of Lagos, where she resides.

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