Snapchat packed on more daily users than expected in the third quarter of 2021 — adding 13 million in the period — to reach an average of 306 million.
But Snap’s stock plunged 25% in after-hours trading, after the company missed revenue expectations and CEO Evan Spiegel called out “significant headwinds” including Apple’s privacy changes to iOS that have put a damper on ad revenue.
Snap reported revenue of $1.07 billion and adjusted earnings per share of 17 cents. That narrowly missed analysts average expectations of $1.1 billion in revenue, while the company topped Wall Street’s forecast of adjusted EPS of 8 cents. The company’s net loss narrowed to -$72 million in Q3 2021.
In prepared remarks, Spiegel said Snap’s advertising business “was disrupted by changes to iOS ad tracking that were broadly rolled out by Apple in June and July. 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.”
With the iOS 14.5 update, Apple now requires users to opt-in to ad tracking. Even with the iPhone privacy change, it was Snap’s first quarter of more than $1 billion in revenue. The DAU count of 306 million for Q3 was up 23% year-over-year, as the social messaging and media company continued to show strong growth globally.
“We’re now operating at the scale necessary to navigate significant headwinds, including changes to the iOS platform that impact the way advertising is targeted, measured, and optimized, as well as global supply chain issues and labor shortages impacting our partners,” Spiegel said in announcing the results.
More to come