Snapchat founder and CEO Evan Spiegel attends a session during the Viva Technology trade show in Paris on June 17, 2022.

Eric Piermont | AFP | Getty Images

Snap the stock fell 13% in extended trading on Tuesday after the social media company reported fourth-quarter earnings that trailed analysts’ estimates.

Here’s how the company did it:

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  • Earnings per share: $0.14, adjusted, compared with $0.11 expected, according to a Refinitiv poll of analysts
  • Income: $1.30 billion versus expectations of $1.31 billion, according to Refinitiv
  • Global Daily Active Users (DAU): 375 million against 375.3 million expected, according to StreetAccount
  • Average revenue per user: $3.47 compared with $3.49 expected, according to StreetAccount

Revenues during the quarter increased slightly a year earlier. As comrades in social media Meta and Twitter, Snap had a tough 2022, when a slowing economy caused companies to cut back on their digital ad budgets and Apple’s iOS privacy update limited targeting capabilities.

In a letter to investors, Snap called it a “challenging year” marked by “macroeconomic headwinds, platform policy changes and increased competition.

For the full year, sales rose 12% to $4.6 billion in 2022. In its earnings report, Snap said it would not provide guidance for the next period. But in the investor letter, the company said its “internal forecast” assumes a decline of between 2% and 10% from a year earlier.

“On the revenue side, we expect the operating environment to remain challenging, as we expect the headwinds we’ve faced over the past year to persist throughout Q1,” the company wrote in the letter.

It’s an ominous start to the fourth-quarter earnings season for ad-supported internet companies. Investors will get one clearer picture on the state of the online ad market later this week. Facebook parent Meta reports fourth-quarter earnings on Wednesday, followed by Alphabet and Amazon on Thursday.

Meta shares fell 2% after Snap’s report. Pinterestwhich releases results next week, fell almost 5%.

Snap’s stock plunged 81% last year as the Nasdaq had its worst year since 2008. The stock has recouped some of its losses, rising 29% in January, along with a broader rally in tech.

Snap said it is refocusing the investments to concentrate on growing its community and engagement, accelerating and diversifying its sales growth and developing augmented reality technology.

The company said its Snapchat+ service now has over 2 million paying subscribers as of the fourth quarter. Snap debuted its subscription service last summer, pitching it as a way for users to get access to pre-release and exclusive features for $3.99 a month.

As executives told analysts several times last year, the company’s online ad platform was built to be easy to use and to enable brands to launch campaigns quickly. But its simplicity also meant companies could quickly pause campaigns, severely affecting Snap’s finances.

Snap notified in August it was to lay off 20% of its workforce of over 6,000 employees. The company also shelved several projects during the year, including its photo drone and Snap Original’s premium shows.

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