Live news updates from April 22nd: S&P 500 drops the most in 7 weeks, Russia seeks full control of Ukraine’s Donbass, says leader,
Snapchat’s parent company has noticed a slowdown in ad growth in response to the war in Ukraine, which is one of several macroeconomic concerns that could affect revenue forecasts in the coming months.
Los Angeles-based Snap said that before the Russian invasion of Ukraine on February 24, year-over-year revenue growth in the quarter was 44 percent, which “exceeded” its forecast. Then a “large number” of advertisers paused their campaigns after the invasion.
Chief Financial Officer Derek Andersen said Thursday that the majority of clients resumed their campaigns “within 10 days” of the invasion, but year-over-year revenue growth, at 32 percent, remained below pre-invasion levels over the remainder. First Quarter.
Anderson said “macro headwinds,” such as supply chain disruptions, labor shortages, rising interest rates and inflationary pressures, were further complicated by the war and remain challenges in the current quarter.
Andersen said the impact of the war on “input costs, marketing budgets, and general economic confidence has been significant”. “The upcoming operating environment may be more challenging, resulting in further campaign pauses or lower advertiser budgets.”
Snap’s forecast revenue will increase 20-25 percent year-over-year in the current quarter, below analyst expectations of 28 percent. Revenue rose 38 percent to $1.06 billion in the first quarter, slightly missing Wall Street expectations of $1.07 billion.
Snap’s loss widened to $360 million in the first quarter from a loss of $287 million a year earlier, mostly due to increased costs. Analysts expect a loss of $29 million.
In a bright spot, Snap’s daily active users rose 18 percent to 332 million in the first quarter, topping analysts’ expectations of 329 million. The company drew 343mn-345mn DAUs in the current quarter, above Wall Street expectations of about 340 million.
Shares were up 1 percent in after-hours trading, but swung between negative and positive territory.