If the Snapchat application, which had 347 million daily active users at the end of June, continues to recruit users in all regions of the world, including in North America and Europe, where certain entertainment platforms are nevertheless facing a saturation. And objectively, the Californian group is doing well in terms of income, with a turnover of 1.1 billion dollars (+ 13% over one year). The catch is that its losses have widened to $422 million from $152 million last year.
“The steady growth of our community enhances our long-term opportunities, but our second quarter financial results do not reflect the extent of our ambition,” company executives said. And to add: “We are not satisfied with our performance, whatever the difficulties linked to the current economic environment”.
Faced with this situation, the company will take several measures. “Snapchat has a lot of brands among its advertisers, and it is brand ads, especially experimental formats around augmented reality, which are the first to go in the event of a cut in marketing budgets”, underlines a specialized firm.
Renew the model
But above all, the group which has never generated an annual net profit and which had already issued a profit warning in May announced “to slow down the pace of recruitment and we will also closely examine our operating expenses”, declared Derek Andersen , the chief financial officer of Snap, while the company, which has 6,500 employees, has seen its recruitment increase by 38% in one year.
In addition, the network’s co-founders, Bobby Murphy and Evan Spiegel, will retain their positions as chief technology officer and general manager until the end of 2026 for a symbolic $1 in compensation per year, accompanied by the allocation of shares if the share price exceeded $40 in the next 10 years. It was at $16.35 at the close on Thursday.
In addition, the bosses plan to focus on innovation and income diversification. At the end of June, the company launched Snapchat +, a paid version of the app, which gives access to additional features for four dollars per month, without removing advertising. Snap also wants to develop better tools for measuring advertising effectiveness. Because the application also suffers from Apple’s regulatory change, which requires application publishers to obtain the consent of users before tracking them in their navigation to collect data for advertising targeting purposes.