Social media company Snap warned it will report revenue and core profit at the low end of its expectations in Q2, citing deteriorating macroeconomic conditions for the bleak outlook.
In a Securities and Exchange (SEC) filing, the Snapchat parent noted it had updated its guidance since its Q1 earnings release on 21 April as “the macroeconomic environment had deteriorated further and faster than anticipated”.
Factors included geopolitical conflicts and the Covid-19 (coronavirus) pandemic, which Snap believes may affect “our business, financial condition, results of operations and prospects”.
In the short-term, Snap stated it would report revenue and adjusted EBITDA below the low end.
Snap had forecast revenue growth of 20 per cent to 25 per cent year-on-year in Q2, and adjusted core earnings to come at a flat $50 million.
Financial Times reported CEO Evan Spiegel issued a memo to staff expanding on the situation, stating Snap as with others faced rising inflation and interest rates, supply chain shortages and labour disruptions, platform policy changes and the war in Ukraine as factors.
The environment had hit social media companies and advertisers which they rely on for revenue.
Hiring at the company and investment would also be conducted at a slower pace than planned given the environment, Spiegel added.
During Covid-19 (coronavirus) lockdowns, Snap experienced an undeniable boom, with a 116 per cent revenue rise in Q2 2021.