Snap released its second-quarter earnings on Thursday and missed analyst’s expectations. Revenue was $1.11 billion for the quarter, up 13% from the same period a year earlier but coming in below its previous guidance of 20% to 25%. Snap also declined to predict its future financial performance due to “uncertainties related to the operating environment.” The company also reported that its daily active users increased 18% year over year to reach 347 million.
“While the continued growth of our community increases the long-term opportunity for our business, our financial results for Q2 do not reflect the scale of our ambition,” the company said in a letter to investors. “We are not satisfied with the results we are delivering, regardless of the current headwinds.”
Snap noted that the second quarter of the year ended up being more challenging than expected and that it now plans to “substantially slow our rate of hiring, as well as the rate of operating expense growth.”
During Snap’s call with investors, executives said the company will continue to cultivate new sources of revenue across its business, including Snapchat’s camera, its Spotlight feature, map, Augmented Reality (AR) and more.
The results come as Snap said in May that it wouldn’t meet the second-quarter guidance it set the prior month. At the time, Snap also indicated that last year’s iOS privacy change continues to affect the company. Once iOS users were presented with a choice to opt-out of off-app tracking, most users chose not to hand over more personal data to the apps they use, which impacted the ad business of social apps like Snapchat and Facebook.
Although Snap continues to grow year over year, the company is growing more slowly than expected due to the overall economic environment.
In a bid to raise revenue, Snap officially launched its paid subscription plan two weeks ago to offer users exclusive features, such as the ability to change the app’s icon and see who has rewatched your Stories. Snapchat+ costs $3.99 per month and unlocks a special badge, the option to pin a friend as your No. 1 friend and the ability to see “the general direction of travel for where friends have moved recently.” The company says that the last feature is only available if your friends have already consented to share their location.
The company also announced this month that it’s introducing Snapchat for Web to let users send snaps and chat with friends via video calls, all from their desktops. Despite still seeing itself as a mobile-first platform, Snap says it decided that it was time to bring Snapchat’s core features to the web after listening to feedback from users.