After reporting that its second-quarter net loss jumped 178% from a net loss in the same time a year earlier, Snap shares dropped more than 26% in extended trading on Thursday. At 5.35pm New York time, the company’s shares, which had decreased by over 65% since the year’s beginning, were trading at $12 apiece.
The company, which owns social media platform Snapchat, recorded a net loss of more than $422 million, compared with a loss of more than $151.6m in the second quarter of 2021.
Its revenue surged 13 per cent on a yearly basis to more than $1.11 billion in the last quarter, missing analyst estimates of $1.14bn. It jumped nearly 4.5 per cent on a quarterly basis.
The April-June period was the fourth consecutive quarter of more than $1bn in sales in the company’s history.
The second quarter “proved more challenging than we expected”, Snap said in a note to investors.
“While the continued growth of our community increases the long-term opportunity for our business, our financial results for second quarter do not reflect the scale of our ambition … we are not satisfied with the results we are delivering, regardless of the current headwinds.”
Snap’s second-quarter earnings followed the company’s May announcement that it would miss its revenue forecast for the quarter.
“Macro environment has deteriorated further and faster than we anticipated when we issued our quarterly guidance last month,” Snap’s co-founder and chief executive Evan Spiegel wrote in the May note.
“As a result, while our revenue continues to grow year over year, it is growing more slowly than we expected at this time.”
Snap also announced a stock repurchase programme of up to $500m of its class A common stock on Thursday. Repurchases will be funded from existing cash and cash equivalents.
The goal of the programme is to use the company’s “strong balance sheet to offset a portion of the dilution related to the issuance of restricted stock units to employees as part of the overall compensation programme designed to foster an ownership culture”, Snap said.
As of the end of last month, Snap had $4.9bn in cash and cash equivalents, restricted cash and marketable securities.
Daily active users, which Snap defines as registered users who open Snapchat application at least once in 24 hours, grew 18 per cent on an annual basis to about 347 million in the second quarter.
The company reported adjusted earnings before interest, tax, depreciation and amortisation of $7.1m in the April-June period, compared to $117m in the same period last year.
Citing “uncertainties related to the operating environment”, Snap did not provide its guidance for the October quarter.
“We are evolving our business and strategy to reaccelerate revenue growth, including innovating on our products, investing heavily in our direct response advertising business and cultivating new sources of revenue to help diversify our topline growth,” Mr Spiegel said.
To return to a higher rate of long-term revenue growth, Snap said it is focusing on three priorities.
First, it will invest in products and platforms to sustain the growth of its community. Second, it will invest heavily in its direct-response advertising business to deliver measurable returns on advertising spending.
And third, it will “cultivate new sources of revenue that will help to diversify our top-line growth to build a more resilient business”.
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