Snap reported better-than-expected first-quarter revenue on Tuesday but caused concern with its decision not to provide guidance for the second quarter. The company cited macroeconomic uncertainties that could affect advertising demand. Shares dropped 13% in after-hours trading following the announcement.
For the first quarter, Snap posted a revenue of $1.36 billion, just surpassing the expected $1.35 billion. The company experienced a slight decline in net income, reporting a loss of 8 cents per share, an improvement from the $0.19 per share loss recorded a year earlier. Despite the loss, Snap reported a 14% year-over-year revenue growth, with ad revenue increasing 9% to $1.21 billion, primarily driven by direct response advertising. However, revenue from brand-oriented advertising dropped by 3%.
The company did not offer guidance for Q2 due to uncertainty around macroeconomic conditions and the potential impact on advertising demand. Analysts had expected Snap to provide second-quarter revenue guidance of $1.39 billion. Snap forecasted that its daily active users would reach around 468 million, slightly higher than the current quarter’s 460 million. The company acknowledged that it had faced headwinds early in the current quarter, urging a cautious approach to balancing investment with revenue growth.
Snap attributed some of the difficulties to changes in the de minimis exemption, which is scheduled to end soon, potentially raising duties on shipments under $800. The company also noted that its daily active users in North America fell slightly, from 100 million to 99 million, though it did not anticipate further declines. Snap’s Snapchat+ subscription service reached 15 million users, contributing to a 75% year-over-year revenue increase for the unit, totaling $152 million.
Snap’s finance chief, Derek Andersen, indicated that the company was revising its full-year operating expenses forecast, lowering the range to between $2.65 billion and $2.70 billion. Additionally, it revised its stock-based compensation guidance down to $1.13 billion to $1.16 billion, from an earlier range of $1.15 billion to $1.20 billion.
As the company navigates challenges, Snap’s cautious stance reflects broader concerns within the tech industry amid ongoing economic uncertainty.
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