Snap’s revenue rose 5% in the final quarter of last year to $1.36 billion.
Despite that growth, the number fell slightly short of Wall Street analysts’ forecasts, which had forecast $1.38 billion for Snapchat’s parent company.
However, the fourth quarter saw net losses narrow to $248 million, showing an improvement over the $288 million reported in the same period a year earlier.
Redundancies The disappointing results come after Snap laid off roughly 10% of its global workforce earlier this week. Snap CEO Evan Spiegel said the decision was “painful” but “necessary to achieve our long-term goals.”
Change of advertising strategy. Snap changed its advertising strategy last year to focus more on direct response ads, which allow users to click and buy products directly from within the app. That change initially led to a decline in sales in the first half of the year, according to Spiegel, but will benefit Snap’s advertising business in the long run.
Takeaway food. Snap has shared additional information about its performance in 2023:
Daily active users increased 10% year over year to 414 million. Fourth-quarter revenue rose 5% year-over-year to $1.361 billion. Fourth quarter operating cash flow of $165 million and free cash flow of $111 million.
looking ahead Snapchat expects its daily active users to reach 420 million in the first quarter of this year, with revenue expected to increase between 11% and 15%.
What Snap is saying. Snap CEO Evan Spiegel said in a statement:
“2023 was a pivotal year for Snap as we transformed our advertising business and continued to grow our global community, reaching 414 million daily active users.” “Snapchat enhances relationships with friends, family and the world, and this unique value proposition has provided a strong foundation on which to build our business for long-term growth.”
Why we care After performing below Wall Street’s expectations, Snapchat may present a unique opportunity for advertisers this quarter. The potential drop in advertiser interest could lead to reduced competition, making ad placements more profitable. This, in turn, offers advertisers the possibility of obtaining a higher return on investment in advertising. However, it could also be a riskier investment for advertisers compared to rival platforms like Meta.
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deep dive Read those on Snapchat report in full for more information.
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