Snap Q1 earnings: Revenue miss sends shares plunging 21%

Snapchat parent Snap (SNAP) announced its first quarter earnings after the bell on Thursday, missing expectations on revenue, sending shares plunging more than 20%.

Snap has been struggling amid a steep decline in advertiser spending, which has hammered the company’s earnings. The social media company's report was a stark contrast to rival Meta's, which beat expectations sending shares soaring.

These are the most important numbers from the announcement compared to what analysts were looking for from the social media company, according to Bloomberg data.

Revenue: $988 million versus $1 billion expected

Adj. earnings per share: $0.01 versus -$0.05 expected

Daily active users: 383 million versus 383.2 million expected

Average revenue per user: $2.58 versus $2.62 expected

"We are working to accelerate our revenue growth and we are using this opportunity to make significant improvements to our advertising platform to help drive increased return on investment for our advertising partners," CEO Evan Spiegel said in a statement.

Snap introduced Snapchat+ in June 2022 as a means of diversifying and boosting the platform’s revenue streams. The service, which costs $3.99 per month, provides subscribers with early access to new features, as well as experimental and exclusive content.

According to Snap, 3 million users have signed up since the service went live with an annual run rate of more than $100 million. But the majority of the company’s revenue still comes from advertising, and that’s taken a hit in the past few quarters as rising interest rates have squeezed corporate ad budgets.

A banner for Snap Inc. hangs from the front of the New York Stock Exchange, Thursday, March 2, 2017, in New York. The company behind the popular messaging app Snapchat is expected to start trading Thursday after a better-than-expected stock offering. (AP Photo/Mark Lennihan)Average revenue per user has slid precipitously for Snap, with the company reporting global ARPU of $2.58 in the first quarter of 2023. The company reported ARPU of $3.20 in Q1 last year. Snap's revenue. meanwhile, fell nearly 7% year-over-year, as the company struggles with the tighter digital advertising landscape.

Sign up for Yahoo Finance's tech newsletter.Meta, meanwhile, has managed to turn its fortunes around, reporting a return to revenue growth after three quarters of declines. The social media giant, which eliminated 21,000 positions since Nov. 2022, beat analysts’ expectations on the top and bottom lines in its latest earnings report.

By Daniel Howley, tech editor at Yahoo Finance. Follow him @DanielHowley

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