Snap has watched its shares plummet over 25% in extended trading on Thursday after it reported worse-than-expected second-quarter results.
The social media company announced plans to slow hiring as it reckons with weakening revenue growth.
Both co-founder Evan Spiegel and CEO, and technology chief Bobby Murphy agreed to new employment contracts that will keep them in their jobs through at least January 2027.
Revenue for the quarter was recorded at $1.11 billion versus $1.14 billion expected, according to Refinitiv.
Global daily active users (DAUs) beat expectations, coming in at 347 million versus the 344.2 million that was expected, according to figures from StreetAccount.
Snap said it was not providing third-quarter guidance as “forward-looking visibility remains incredibly challenging,” in a letter to investors.
The firm said that revenue so far in the period is “approximately flat” from a year earlier. Analysts were expecting sales growth of 18% for the third quarter, according to Refinitiv.
“We are not satisfied with the results we are delivering, regardless of the current headwinds,” the company said in the letter.
Snap is enduring a tough year so far, losing almost two-thirds of its value so far.
In May, the company said it wouldn’t meet the second-quarter guidance it set the prior month, leading to a 43% plunge in the share price.
At the time, Snap cited a macroeconomic environment that was deteriorating much faster than expected.
Despite reduced guidance, Snap still missed its estimates, with revenue increasing 13% year-on-year, instead of the 16% analysts expected.
“The second quarter of 2022 proved more challenging than we expected,” Snap said in the investor letter.
The company said it now plans to “substantially slow our rate of hiring, as well as the rate of operating expense growth.”
Slowing demand for its online ad platform was cited as the main reason for its disappointing results, as well as Apple’s 2021 iOS update and increased competition from companies like TikTok have led marketers to pull back on their spending.
Snap has unveiled a number of new features lately in a bid to claw back investor faith, including a web app for its mobile app Snapchat as well as its Snapchat+ paid subscription plan, which costs $3.99 a month and lets people access early features and see who has viewed their Snaps.
Tech investors will see the online ad landscape more clearly as Twitter, Alphabet and Meta are all due to report results within the coming days.
