Snapchat parent Snap (SNAP) will report its Q2 earnings after the closing bell on Thursday, and all signs are pointing to a rough quarter for the ephemeral messaging app maker.
Here’s what to expect from the company in the report, as compiled by Bloomberg, compared to how it performed in the same quarter in 2021.
Revenue: $1.14 billion expected versus $982.11 million in Q2 2021
Adjusted EPS: -0.05 expected versus $0.10 in Q2 2021
Snap’s earnings follow the company’s May announcement that it will likely miss its prior revenue forecast for the quarter.
“The macroeconomic environment has deteriorated further and faster than anticipated,” the company said in a letter filed with the SEC.
Shares of tech stocks have been eviscerated this year, with shares of Amazon down more than 25% and shares of Facebook parent Meta off 45% year-to-date. But even among the beaten down-tech stocks, Snap is a dog. Shares are down a brutal 65% year-to-date, putting it in the rare company of the likes of Netflix, which is down 63%.
It doesn’t help that Snap is dealing with a cavalcade of negative news including the continued damage caused by Apple’s App Tracking Transparency, which reduces how much data apps can collect on users; a broader slow down in the advertising space; and headwinds from COVID and the war in Ukraine.
In a bid to raise revenue, Snap announced Snapchat+ subscription service in June. Priced at $3.99 Snapchat+ promises users access to "exclusive, experimental, and pre-release features."
This month, the company also announced it is bringing Snapchat to desktop computers. That should enable users to access their conversations without having to pull out their phones while sitting at the desks.
Snap is still doing well when it comes to user growth. Daily active users continue to increase despite pandemic fears ebbing and more people going outdoors, though perhaps not as rapidly as before.
In Q1 2022, the company reported having 332 million daily active users, up 18% year-over-year. That was a slight down tick from the 20% year-over-year increase it saw in Q4 2021 and 5 percentage points off of the 23% growth it saw in Q3 2021.
Snap’s earnings could serve as a good indicator of the health of the digital ad market in general, and set the stage for earnings reports from the likes of Meta and Alphabet next week.
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