Snap’s shares plummeted after the company reported a significant loss in the final three months of 2023. The company’s net loss for the December quarter was $248 million, which was an improvement from the same period in the prior year, but still resulted in shares falling by around 30% in after-hours trading. Snap’s revenue for the quarter showed growth of 5% year-over-year to $1.36 billion, marking its second consecutive quarter of revenue gains after experiencing declines in the previous year. However, the conflict in the Middle East was cited as a contributing factor to the slower growth.
The report also revealed that Snap announced a 10% reduction in their workforce, cutting around 500 jobs, which suggests that the company is still in cost-cutting mode. Investors expressed disappointment at Snap’s results, especially in light of Meta’s 200% year-over-year profit growth for the same period, which reflects an improvement in the larger digital advertising market. The company has been working to improve its advertising technology and offerings, particularly in response to changes Apple made to its app tracking policies in 2021.
Snapchat also announced that its Snapchat+ subscription program, designed to diversify its revenue, now has over 7 million subscribers, up from the 5 million it reported earlier. The company reported strong user growth, with daily active users increasing 10% year-over-year to 414 million in the December quarter, mostly from regions outside the US and Europe. However, average revenue per user worldwide dipped 5% from the previous year’s quarter. Snap is projecting continued growth in daily active users for the current quarter, as well as year-over-year revenue growth of 11% to 15% for the first three months of 2024.
Snap is also trying to revamp its public image and distance itself from social media peers like Meta and TikTok, by launching a new brand campaign that emphasizes its focus on private, personal conversations rather than passive consumption of content promoted by an algorithm. In the context of the company’s efforts to improve, it is attempting to testify alongside other tech leaders in a Senate hearing focused on the platforms’ safety measures for young users.