Snap, the company that owned the popular photo and video app Snapchat, reported worse-than-expected earnings for its latest quarter. Despite reporting revenue of more than $1 billion for the quarter, the company earnings still missed hitting average analysts' estimates.
The company's worse-than-expected earnings coupled with its grim forecast of more headwinds sent its stock price crashing down on Thursday. Snap's shares fell by more than 25% in after-hours trading.
Snap explained that privacy changes imposed by Apple negatively affected its ability to target and measure its advertising metrics. Snap's chief business officer, Jeremi Gorman, said changes to advertising metrics within Apple's smartphone operating system had affected its business more than initially expected.
Gorman referred to the recently implemented privacy feature that was part of Apple's iOS 14.5 update earlier in the year. The update allowed users to more easily opt-out of letting apps track their behavior and sell their personal data.
"While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our advertising partners to measure and manage their ad campaigns for iOS," Snap CEO Evan Spiegel said during the company's earnings call.
The recent update had also negatively affected other apps, particularly those that rely heavily on advertising for their revenues. Facebook was very vocal about how the changes had affected its business.
For its latest quarter, Snap reported a net loss of $71.9 million - down from the $199.8 million loss over the same period last year. Overall sales for the period had increased by 57% to $1.07 billion. This was the first time the company had reported sales of over $1 billion. Despite the achievement, the figure still missed hitting the $1.1 billion expected by analysts for the quarter.
Snap told investors that it still expects significant headwinds in the coming quarters, fueled mostly by the ongoing global supply chain disruptions and the lingering issue of Apple's privacy changes. The company lowered its fourth-quarter revenue forecast to between $1.165 billion and $1.205 billion - significantly lower than the $1.36 billion expected by Wall Street.
