Snap earnings call: Expecting more challenges, pleased with user growth (NYSE: SNAP)

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NYCstock / iStock Editorial via Getty Images

Snap stock (NYSE: SNAP) has taken a ride after the company’s Q1 earnings report – moving from an immediate double-digit loss to a sharp gain, and back and forth around the flat line.

Just after the release, the stock hit its after-hours low, down 23%; fifteen minutes after that, it was up more than 12%its postmarket high.

Now with its conference call in the books, it’s currently back to a modest 2-cent decline (-0.1%).

The word of the day for Snap is “challenging”: CEO Evan Spiegel made his description of the operating environment as challenging front and center in his remarks, and Chief Financial Officer Derek Andersen used the word to describe why the company expects a 30% run rate in business growth quarter-to-date is likely to fade as the quarter rolls on.

He also highlighted the impact of the war in Ukraine, saying the company could expect additional campaign breaks or advertiser budget reductions. A large number of advertisers paused their ad campaigns in the days following Russia’s invasion of Ukraine in late February – and while the majority of advertisers resumed their campaigns, many remained concerned about inflation and continuing geopolitical risk, he said.

Comparisons are getting tougher as well; he noted that top-line growth in Q2 of last year accelerated by 50 percentage points. But as for user growth, which fell just shy of meeting its multi-quarter streak of 20% -plus growth, “we’re pleased with what we’re seeing … we continue to have deep penetration of hard-to-reach demos in the most important advertising market. “

As for the key question of ongoing management of Apple’s iOS privacy changes, Chief Business Officer Jeremi Gorman clarified that “we do not fingerprint. There is no personally identifiable information that is directly linked to the customer.”

“But given the platform changes, we have experienced signal loss, including IDFA and some IP addresses, and we expect that trend to continue,” she says. She does cite “deterministic measurement solutions” that allow the company to match the conversion taking place, and which form the basis of Snap’s measurement.

Snap’s set to make its big product push at next week’s Partner Summit. Asked what he’s most excited about in that area, Spiegel says full details will come at the summit, but “what we’re most excited about is really the intersection between augmented reality and commerce”: People have used all sorts of accessories and fashion items to express themselves through AR.

“And we found that by partnering with retailers and fashion brands … if we can actually use their real products in augmented reality, it dramatically improves conversion for those business and so can lead to higher sales,” Spiegel says.

“We’ve also done some work on fit and size to try and help people find the right size, which we found … can really improve the rate of return for merchants as well,” Spiegel says. “And so we have this strategy really to use augmented reality to both improve the top and bottom line for retailers and of course, radically improve the customer experience.”

NYCstock / iStock Editorial via Getty Images Snap stock (NYSE: SNAP) has taken a ride after the company’s Q1 earnings report – moving from an immediate double-digit loss to a sharp gain, and back and forth around the flat line. Just after the release, the stock hit its after-hours low, down 23%; fifteen minutes after…

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