Technology

Snap warns inflation could hit growth, shares drop 10%

FILE PHOTO: The Snapchat app is seen on a smartphone in this illustration taken July 13, 2021.

FILE PHOTO: The Snapchat app is seen on a smartphone in this illustration taken July 13, 2021. | Photo Credit: Reuters

Snap Inc reported better-than-expected first-quarter user growth on Thursday while it missed expectations on revenue, as the parent company of Snapchat said supply-chain disruptions and the invasion of Ukraine hurt advertising demand.

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Shares of Snap fell 10% in trading after the bell.

The company warned that inflation, labour shortages and other economic challenges may continue and predicted its revenue growth rate in the second quarter could be hurt.

Snap forecast second-quarter revenue growth between 20% and 25% over the previous year. The growth rate so far in the current quarter has been 30%.

The Santa Monica, California-based company is the first of the major tech apps to report first-quarter earnings, and the results could cast a shadow over Facebook owner Meta Platforms Inc and Twitter Inc, which also earn revenue by selling digital advertising and will report results next week.

A large number of advertisers paused their ad campaigns in the days following Russia's invasion of Ukraine in late February, said Snap CFO Derek Andersen, in prepared remarks released before an earnings call with analysts.

While the majority of advertisers resumed their campaigns, many remained concerned about inflation and continuing geopolitical risk, he said.

Revenue for the first quarter ended March 31 was $1.06 billion, an increase of 38% from the prior-year quarter. The figure missed analyst expectations of $1.07 billion, according to IBES data from Refinitiv.

Daily active users on Snapchat rose 18% year-over-year to 332 million, beating consensus estimates of 329.7 million users.

Snap forecast second-quarter daily active users to be between 343 million and 345 million.


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Printable version | Jul 3, 2022 1:07:24 am | https://www.thehindu.com/sci-tech/technology/snap-warns-inflation-could-hit-growth-shares-drop-10/article65344790.ece