(Reuters) -Snap on Tuesday reported second-quarter revenue growth that was the slowest in more than a year, hurt by a temporary glitch in its advertising platform, sending its shares down more than 14% in extended trading.
The Snapchat-parent said it had reverted the error that unintentionally allowed some ads to run at much lower prices.
The Santa Monica, California-based company recorded second-quarter revenue of $1.34 billion, up 8.7% from last year and largely in line with estimates, but lower than the double-digit growth it was recording in the last five quarters.
Snap’s results came after stellar performances by rivals, including Instagram and Facebook parent Meta Platforms and Reddit.
“The digital ad tailwinds that propelled Meta and Reddit to blowout quarters turned into a light breeze for Snap,” said eMarketer principal analyst Jasmine Enberg.
Under different circumstances, investors might have overlooked its ad platform misstep, but “there is little room for mistakes,” she added.
Snap’s quarterly revenue was also hit by the timing of Ramadan and the termination of de minimis exemption or a duty-free import loophole in the U.S.
The company said its expanded roll-out of the new ad format — Sponsored Snaps, video ads that appear in user inboxes — across the U.S. and several other global regions is helping by driving more user actions and deeper engagement with ad content.
Small and medium-sized businesses were the largest contributors to ad revenue growth and its subscription service Snapchat+ remained a key driver for diversifying revenue beyond advertising.
Snapchat+ subscribers rose 42% to nearly 16 million for the quarter ended June 30. Daily active users rose 9% to 469 million, compared with estimates of 467.9 million.
The company forecast third-quarter revenue between $1.48 billion and $1.51 billion, compared with analysts’ average estimate of $1.48 billion, according to data compiled by LSEG.
Snap expects quarterly adjusted earnings before interest, taxes, depreciation, and amortization to be between $110 million and $135 million, above estimates of $111.9 million.
Its net loss widened to $263 million from $249 million a year ago.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Leroy Leo)
