(San Francisco) Snapchat continues to gain users and lose money, according to its quarterly results released Tuesday, which bode poorly for those of industry giants like Meta (Facebook, Instagram).
The social network that has long bet on augmented reality now has 375 million daily users, 17% more than at the end of 2021.
Snap, the parent company, also welcomed in a press release its progress in terms of engagement (time spent on the platform and interactions between users).
But its revenue stagnated at $1.3 billion for the fourth quarter of 2022 and it posted net losses of $288 million (instead of net profit of $23 million a year ago)
Over the year, its revenues rose only 12%, the lowest annual growth for the Californian company since its IPO almost six years ago. And its net losses tripled to $1.43 billion.
Above all, boss Evan Spiegel warned that his group continued to face “significant headwinds” on the growth side.
He indicated during the conference call to analysts that he had undertaken a “thorough review of the architecture of the advertising sales interface”.
On Wall Street, parent company Snap lost around 14% in electronic trading after the stock market closed.
“Much more modest growth”
These results “are a harbinger” for the industry, reacted Jasmine Enberg of Insider Intelligence. “They show that the social media advertising market is in a disturbing state.”
At the end of August, Snap announced the reduction of approximately 20% of the workforce, or more than 1,200 employees.
Since then, most major tech companies have social plans in place. Ten days ago, Alphabet, the parent company of Google, thanked around 12,000 people worldwide, or just over 6% of its total workforce.
The major platforms are suffering from advertisers’ budget cuts in the face of inflation, and from Apple’s regulatory changes, which reduce publishers’ leeway in terms of collecting personal data for advertising targeting purposes.
“Investors will have to prepare […] much more modest growth” in this sector, added the analyst.
The case of Snapchat is special, because the app has built its success with younger generations on the effects of augmented reality, but advertisers “do not understand” this technology, she underlines.
When budgets are constrained by poor economic conditions, brands tend to revise downwards their expenses considered “experimental”.
But the platforms perceived as safe bets – Google, Facebook, Instagram – are no longer immune.
Alphabet achieved its weakest revenue growth since 2013 last summer, barring the onset of the COVID-19 pandemic.
And Meta saw its quarterly profits halve to $4.4 billion.
The two neighbors of Silicon Valley publish their results for the fourth quarter on Wednesday and Thursday.