Snap Inc on Thursday missed analysts’ expectations for its quarterly revenue as recent changes to its ad platform hurt ad demand, and warned that the coming quarter could fall short of targets for Wall Street.
The company, which owns the photo-messaging app Snapchat, has long been known for driving new social media trends that have been copied by bigger rivals, but it has faced doubts from investors about whether it can turn its investments into new technologies like augmented reality (RA) in revenue growth.
Although Snap It said it was not providing formal financial guidance, its internal revenue forecast for the second quarter is $1.04 billion, which would be a 6% year-over-year decline. The internal forecast is below analyst expectations of $1.13 billion, according to IBES data from Refinitiv.
In a letter to investors, Snap said it was taking steps to improve the relevance of ads shown to users and to simplify the way people can interact with ads from Snapchat.
The company said it would take time for its ad systems to adjust to the updates and improve ad performance.
Revenue for the first quarter, ended March 31, was $989 million, below analyst expectations for $1.04 billion, according to IBES data from Refinitiv.
The net loss of Snap was $329 million during the quarter, narrowing from a negative result of $360 million a year earlier.
Along with AR, Snap has deepened its investment in artificial intelligence (AI) and has recently expanded his chatbot called My AI to all Snapchat users around the world.
Daily active users on Snapchat they increased 15% year-on-year to 383 million, in line with Wall Street expectations. The company said it expects between 394 million and 395 million daily active users in the second quarter.
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