Snap Inc. reported revenue of $1.13 billion in the third quarter of 2022 amid a period of turmoil in which it revoked its forward-looking guidelines, laid off about 20 percent of its employees and completely restructured its operations.
Turnover was 6 percent higher than a year earlier, but remained virtually unchanged from the second quarter. Snap reported a net loss of $360 million, due in part to extensive restructuring costs.
Daily active Snapchat users rose to 363 million in the quarter, up from 347 million the previous quarter and up 19 percent year over year.
In August, the company announced a full restructuring, with CEO Evan Spiegel saying the company plans to “increase the focus on our three strategic priorities: community growth, revenue growth and augmented reality.”
Focusing on those core areas would help get the company back into growth mode, Spiegel argued.
As part of that restructuring, Snap laid off approximately 20 percent of its workforce and cut multiple business units, including Snap Originals programming. Snap reported restructuring charges of $155 million in the quarter.
“This quarter, we took action to further focus our business on our three strategic priorities: growing our community and deepening their engagement with our products, reaccelerating and diversifying our revenue growth and investing in augmented reality,” Spiegel said in a statement Thursday. . “Growing our community to 363 million daily active users, up 19% year over year, continues to expand our long-term opportunities as we navigate this volatile macroeconomic environment.”
Snap has served as a canary in the coal mine for tech companies this year, after warning in May that the macroeconomic environment was deteriorating.
It continued to sound alarm bells in the third quarter, calling “significant headwinds” for its business. And its role as a social media canary in the coal mine may also be put to the test as it warned of slowing engagement in the US, the most mature market.
“Total time spent watching content in the United States was down 5% year-over-year as reduced engagement with Friend Stories was not fully offset by growth in viewership and growth in time spent to Discover and Spotlight in the US,” the letter said.
The company also warned that revenue growth continued to slow and expected no growth in the current quarter.
“We find that our advertising partners in many industries are reducing their marketing budgets, especially in light of the headwinds of the corporate environment, inflation-driven cost pressures and rising costs of capital,” the letter continued. In some industries where revenue growth remains strong, but companies are facing input cost pressures due to inflation, we have found campaign budgets have declined as companies attempt to offset input cost pressures.”
The letter continued that the company is focusing its investments on its Spotlight platform for creators and on direct response advertising, which it believes will grow even amid increased economic uncertainty.