Slow revenue growth
The revenue growth was impacted by a double-digit decline in the brand-oriented business. The company continued to face challenges in the form of macroeconomic headwinds, platform policy changes, and increased competition which created a tough operating environment. At the same time, the direct response business managed to grow 4% year-over-year as the company made progress on measurement and optimization.
Drop in profits
Snap reported adjusted EPS of $0.14 in Q4, which surpassed projections but was down 38% from the year-ago quarter. The company also posted a net loss of $288 million, or $0.18 per share, on a GAAP basis compared to a net income of $22.5 million, or $0.01 per share, in the year-ago period.
User growth
On the bright side, Snap’s daily active users (DAUs) grew 17% year-over-year to 375 million in Q4. DAUs increased both sequentially and year-over-year across all its regions. DAUs reached 100 million in North America while in Europe, they reached 92 million. Rest of World DAUs stood at 183 million and the company sees significant potential for community growth over the long term in this segment. For the first quarter of 2023, Snap expects DAUs to range between 382-384 million.
Bleak outlook
Snap did not provide guidance for the first quarter of 2023 due to the challenging operating environment and it expects the headwinds faced in Q4 to persist in Q1. On its quarterly call, the company said it has seen revenue decline 7% YoY thus far in Q1. Its internal forecast assumes revenue will decline 2% to 10% YoY in Q1.