The Santa Monica-based social media company reported revenues of $1.1 billion for the third quarter of 2021, an increase of 57% from the same period last year. Adjusted EBITDA improved 209% from the third quarter of 2020 to $174 million, and net losses improved by 64% to $71.9 million after the same period in 2020 hit $200 million.
The company also reported 306 million daily active users, exceeding second-quarter projections of 301 million, leading to year-over-year growth of more than 20% for four consecutive quarters.
For its fourth quarter outlook, the company projected between $1.16 billion and $1.2 billion in revenues, numbers that fall short of expectations that pointed to as much as $1.36 billion. Conversely, the company projected between 316 million and 318 million daily average users, higher than the 312 million analysts were expecting.
When the company indicated in its report that privacy changes implemented by Apple and supply chain issues were affecting its bottom line without immediate relief in sight, Snap’s stock plunged as much as 27.5% over the following five days, to $54.30 from $75.10 a share.
Chief Executive Evan Spiegel said Apple’s privacy feature App Tracking Transparency, has disrupted Snap’s ability to generate revenue via targeted advertising.
Additionally, he suggested that supply chain interruptions and labor shortages have reduced short-term interest in advertising to generate additional customer demand at a time when their businesses are already supply-constrained.
“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,” Spiegel said in prepared remarks.
Snap was not the only social media company whose shares dropped as a result of its third quarter earnings report. Trading of Facebook Inc. and Twitter Inc. declined by 7% in the hours after Spiegel’s presentation, attributable to fears other platforms may suffer a similar impact on their financial results.
Spiegel was optimistic about the company’s growth despite these setbacks.
