Drew Angerer/Getty Images News
Snap stock (NYSE:SNAP) was reeling, down 27% as it held a conference call Thursday afternoon after the latest in a growing string of disappointing quarters.
The company highlighted a few positive measures – it beat on profitability measures, outpaced expectations for user growth and authorized buying back $500M worth of its stock. But in a grim year for advertising-focused media, Snap logged its worst-ever revenue growth and fell short of analyst expectations.
“Our business continued to face significant headwinds this quarter,” CEO Evan Spiegel said on the call, while recapping that the company refocused on three strategic priorities: growing community and deepening engagement; reaccelerating and diversifying revenue growth; and investing in augmented reality.
When it comes to the overall ad approach, Snap is focused on “increasing our share of wallet as growth in the overall digital advertising segment slows.” That comes by working to increase the return on spend generated by its direct response ad platform “as we believe these are the most defensible advertising budgets in a challenged economic environment.”
The company moved quickly to Q&A after a brief introduction of newly promoted Chief Operating Officer Jerry Hunter, who emphasized his focus from here: “On driving lower funnel performance and improving yield of our inventory for advertising partners.”
“We’re working to improve optimization against lower-funnel objectives to drive more conversions, and innovating on our advertising formats” in order to make them more engaging, Hunter said.
The deceleration in revenue growth came across both the direct response and brand advertising business, Chief Financial Officer Derek Andersen noted; DR advertising grew “modestly” faster than the overall business, while brand ads declined year-over-year.
Snap notably declined to provide any expectations for revenue or EBITDA for the fourth quarter, Still: The company is still expecting revenue to grow seasonally “at a pretty good clip,” Andersen said; even “flattish” year-over-year revenue means about a 15% step up sequentially.
Advertisers are “looking for reach but they’re also looking for performance, especially in this period of time which is why we focus so heavily on evolving our direct response business … and making sure that we’re really delivering return on ad spend for our partners,” Spiegel said.
Snap wasn’t the only social-media stock in a downbeat place Thursday evening; Alphabet, Meta, Twitter and Pinterest were down as well.
