Snap Inc., the social media and camera company, recently announced its second-quarter 2019 financial results. Here we take a look at some key facts from the report, including opt-in rates, stock repurchase plans, and advertising commitments through 2022. We also look at how these financial results relate to Snapchat’s future.
Snap Inc.’s second-quarter 2019 financial results
The company’s second-quarter financial results have missed expectations, but the company still beat the consensus estimate for Q3 FY 2021. Revenue grew 42.4% compared to the same quarter last year, but adjusted EPS dipped. The company also cited new headwinds that could slow growth, including labor shortages and challenges in the global supply chain.
As for its financial results, the company reported a net loss of $227.4 million for the three-month period and $793 million for the nine-month period, compared to a loss of $1.1 billion for the same period last year. Adjusted EBITDA (Earnings Before Interest and Taxes) came in at $42.4 million, compared to $525.2 million for the same period last year.
Its opt-in rates
While a significant drop in opt-in rates isn’t surprising, it’s not the end of the world. In fact, these declines have been a consistent trend for tech companies. Facebook, for example, has seen its data loss decrease steadily over the last two years, and that decline extends to its IDFA and Facebook pixel data. Both types of data allow marketers to build audiences and measure their campaigns. However, low opt-in rates limit Facebook’s ability to accurately track web and app conversions and reduce the accuracy of its targeting campaigns.
The privacy focus of social media platforms has given consumers peace of mind, but it has also created a dilemma for advertisers. How do you prove that your campaigns are delivering results while also maintaining privacy? Snapchat has solved this dilemma by introducing a new product called Advanced Conversions, which protects users’ privacy preferences while still allowing marketers to hit their goals. Advanced Conversions allows marketers to measure conversions incrementally, while maintaining audience size and targeting preferences.
Its stock repurchase program
Snap recently announced a stock repurchase program for its shareholders of up to $500 million. The program is designed to counteract the dilution caused by the issuance of restricted stock units and encourage a culture of ownership among shareholders. It will be funded with cash equivalents. As of last month, Snap held about $4.9 billion in cash and marketable securities.
The news of the stock repurchase program comes as the company faces a challenging macroeconomic environment. It has been hit hard by the challenges faced by the United States economy and increased competition from TikTok. In May, Snap announced that it would cut hiring for the rest of the year. In the last year, the company hired about 2,000 new employees. The company said that the impact of these challenges stemmed from higher inflation, supply chain shortages, and changes in platform policies.
Its advertising commitments for 2022
According to Pathmatics data, food and beverage advertisers were the top spending category on Snapchat in February 2022, with DoorDash, GrubHub, and Uber Eats spending upwards of $100k per ad. On Valentine’s Day alone, food delivery companies increased their advertising commitments to Snapchat by more than 60%, spending nearly $100,000. They also increased their app downloads by 17 percent.
Despite the disappointing results, Snap is still on track to make a profit. The company has a built-in audience of 347 million users and has a close connection to the Hollywood community. However, it is reevaluating its strategy for streaming TV, which was once a top priority for the company. Snap has already shuttered its Pixy drone project, and the company now plans to double down on augmented reality and the metaverse. While this move will not directly affect Snap’s bottom line, it will save the company $50 million over the next year.