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Snap Warns Inflation Could Hit Revenue Growth, Ad Demand, Marketing & Advertising News, ET BrandEquity

Daily active users on Snapchat grew 18% year-on-year to 332 million, beating consensus estimates of 329.7 million users. (Image courtesy: website)

Snap Inc predicted good prospects for user growth on its Snapchat app on Thursday, but said supply chain disruptions and inflation could continue to hurt advertising demand.

Snap shares fell 10% immediately after the results but pared losses later as investors digested the mixed results.

Snap expects between 343 and 345 million daily active users in the second quarter, above Wall Street estimates of 340 million.

However, the company warned that inflation, labor shortages and other economic challenges could put pressure on earnings. It forecast second-quarter revenue growth of between 20% and 25% year-on-year. The growth rate so far in the current quarter has been 30%.

The Santa Monica, Calif.-based company is the first of the major tech apps to report first-quarter results, and the results could cast a shadow over Facebook owner Meta Platforms Inc and Twitter Inc, which also generate revenue in selling digital advertising and report results next week.

A slew of advertisers suspended ad campaigns in the days following Russia’s invasion of Ukraine in late February, Snap chief financial officer Derek Andersen said in prepared remarks released ahead of a conference call. with analysts.

While the majority of advertisers have resumed their campaigns, many remain concerned about inflation and lingering geopolitical risk, he said.

Revenue for the first quarter ended March 31 was $1.06 billion, an increase of 38% over the prior year quarter. The figure beat analysts’ expectations of $1.07 billion, according to IBES data from Refinitiv.

Daily active users on Snapchat grew 18% year-on-year to 332 million, beating consensus estimates of 329.7 million users.

The move follows an executive order under the Telecommunications Business Act that aims to curb the dominance of store operators, such as Apple and Google…