Snap, the parent company of Snapchat, reported its second straight decline in quarterly sales on Tuesday as it continued to struggle with bringing in more advertising.
The social media company posted revenue of $1.07 billion for the second quarter, down 4 percent from a year earlier. In April, Snap had a 7 percent drop in revenue from a year earlier, the company’s first quarterly decline in sales since it went public in 2017.
Snap recorded a net loss of $377 million for the second quarter, which was narrower than a year earlier but its sixth consecutive loss. The results sent the company’s stock plunging more than 18 percent in after-hours trading on Tuesday.
In an earnings call, Evan Spiegel, Snap’s chief executive, said, “We are still far from achieving the revenue growth to which we aspire.”
Snap has been grappling with an industrywide ad slump that was brought on by a broader economic slowdown. Over the past year, the company has performed layoffs, reordered the priority of some of its business initiatives and reorganized some of its executives to deal with the challenges.
Yet even as slower ad spending has buffeted large tech companies such as Google and Meta over the past year, Snap’s issues have been particularly difficult. As a smaller social media company with a narrower audience, it is not always the first stop for advertisers. And it faces intense competition from rivals like TikTok, which has gained users more rapidly and is now bigger than Snap.
In the investor letter, Snap said it had made changes to its ad platform this year to try to increase the number of users who interacted with an ad after clicking it. But some large advertisers were “disrupted,” the company said, adding that the shift will nonetheless lead to “sustained revenue growth over time.”
To increase advertising, Snap has also tried attracting more creators with a revenue-sharing program and has tested sponsored links in its artificial-intelligence-powered chatbot, My AI, where users receive ads based on their chat history with the bot. To diversify where it makes money, Snap rolled out a subscription service called Snapchat+ last year, and it has gained more than four million users.
Even so, the company’s challenges are likely to continue. Jasmine Enberg, an analyst at Insider Intelligence, said these new initiatives were “not really enough to move the needle for the business just yet.” She added, “I don’t expect the ads business to start to turn around until the economy does.”
For the current quarter, Snap projected its revenue would be $1.07 billion to $1.13 billion, just meeting Wall Street estimates of $1.13 billion.
One bright spot for Snap was its number of users, which rose. Daily active users reached 397 million in the second quarter, up 14 percent from a year earlier. Most of that growth came from outside the United States, the company said.