Economic Insider

Inflation Could Hit Revenue Growth —Snap, Inc.

Snap Inc. revenue may be pressured by inflation

Photo: Reuters. On Thursday, Snap, Inc. forecast increased user growth on its Snapchat app. But said supply-chain disruptions and inflation may continue to hurt advertising demand.

Immediately after the results, shares of Snap fell as much as 10%. But pared losses later on as investors digested the mixed results.

Above Wall Street estimates of 340 million, Snap forecast second-quarter daily active users between 343 million and 345 million. 

However, the company warned that revenue may be pressured by inflation, labor shortages, and other economic challenges. It predicts second-quarter revenue growth between 20% and 25% over the previous year. So far, the growth rate in the current quarter has been 30%.

The Santa Monica-based company is the first of the major tech apps to report first-quarter earnings. The results could cast a shadow over Facebook owner Meta Platforms Inc and Twitter Inc. They also earn revenue by selling digital advertising. They will report results next week.

In the days following Russia’s invasion of Ukraine in late February many advertisers paused their ad campaigns. According to Snap Chief Financial Officer Derek Andersen in prepared remarks released before an earnings call with analysts.

He added that while most advertisers resumed their campaigns, many remained concerned about inflation and continuing geopolitical risk.

For the first quarter ended March 31, revenue was reported at $1.06 billion. An increase of 38% from the prior-year quarter. According to IBES data from Refinitiv, the figure missed analyst expectations of $1.07 billion.

Daily active users on Snapchat rose 18% year-over-year to 332 million, contrasting consensus estimates of 329.7 million users.

Opinions expressed by Economic Insider contributors are their own.

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