Snap Inc Q2 2023 Earnings: Will declining revenue affect Snapchat share price?
Snap Inc stock was 3.73 % lower on Thursday, 27th July 2023 at $10.33 per share after the company reported results for the quarter ending June 2023. The share price fell as it saw a double-digit decline in earnings and the company forecast weaker-than-expected earnings for the upcoming quarter ending September 2023.
Snap Inc: Historical Share Price Performance
| 1 month | 6 months | 1-year | 5-years |
| -11.33% | -6.85% | 6.83% | -18.85% |
Snap Inc: Users
Average Daily Active Users (DAUs) were 397 million in Q2 2023, an increase of 50 million, or 14% year-over-year.
| Q2 2022 | Q2 2023 | YoY % change | |
| DAUs | 347 million | 397 million | 14.41% |
DAUs increased sequentially and year-over-year in North America, Europe, and the Rest of the World. This showcases significant opportunities to expand the Snapchat community globally.
| Q2 2022 | Q2 2023 | YoY % change | |
| North America | 99 million DAU | 101 million DAU | 2.0% |
| Europe | 86 million DAU | 94 million DAU | 9% |
| Rest of the World | 162 million DAU | 202 million DAU | 25% |
| Global | 347 million DAU | 397 million DAU | 14% |
Snap Inc: Total Revenue
Total Revenue has seen a decline of approximately 4% YoY to $1,068 million. The company focused on accelerating and diversifying its revenue growth and because it remains in a period of ‘rapid transition’ to improve its advertising platform, they have limited revenue sources. The company’s Average Revenue per User fell by nearly 16% this quarter to $2.69 which also led to the overall revenue drop.
| Q2 2022 | Q2 2023 | YoY % change | |
| Total Revenue | $ 1,111 million | $ 1,068 million | -3.87% |
| Average Revenue per User | $ 3.20 | $2.69 | -15.94% |
Snap Inc: Net Loss
The company reported a net loss of $377 million, a 10.66% improvement from the prior year i.e.; Q2 2022 results, wherein the company saw a net loss of $422 million. This can be due to the Adjusted EBITDA decline which was - $38 million, compared to $7 million in the prior year. Along with that, the Operating cash flow was - $82 million, compared to - $124 million in the prior year, while the Free Cash Flow was - $119 million, compared to - $147 million in the prior year.
| Q2 2022 | Q2 2023 | YoY % change | |
| Net Loss | $422 million | $377 million | 10.66% |
Snap Inc: Outlook
- Snapchat expects to hit 1 Billion Monthly Active Users (MAU) in the next 2-3 years.
- The Daily Active Users (DAU) will reach 405 million to 406 million in Q3 2023.
- Total Revenue is estimated to be between $1,070 to $1,130 million implying negative 5% to flat year-over-year growth
Snap Inc: Analyst View
- Broker Wells Fargo has an "equal weight" rating for Snapchat. It cut its Share Price Target to $9 from $10.
- Bernstein has a "market perform" rating for Snapchat. It cut its Share Price Target to $11 from $13.
- Jefferies has a "hold" rating for Snapchat. It cut its Share Price Target to $11 from $13.
- Credit Suisse has an "outperform" rating for Snapchat. It also lowered its Share Price Target to $15 from $16.