Snap CEO warns company will miss revenue and profit estimates, plans to cut hiring

In this screenshot, Snap Inc. CEO Evan Spiegel takes the stage at the virtual Snap Partner Summit 2021 on May 20, 2021, in Los Angeles.

Snap Partner Summit 2021 – Snap Inc | fake images

Snap will miss its own revenue and adjusted earnings targets in the current quarter, CEO Evan Speigel warned in a note to employees on Monday.

The social media company will also scale back hiring through the end of the year as it seeks to manage expenses, Speigel wrote. Part of the letter was filed with the Securities and Exchange Commission.

“Today we file an 8-K, sharing that the macro environment has deteriorated faster and faster than we anticipated when we issued our quarterly guidance last month,” Spiegel wrote in the note. “As a result, while our revenue continues to grow year over year, it is growing more slowly than we expected at this time.”

In April, Snap reported first-quarter earnings that missed Wall Street’s sales and earnings expectations. At the time, the company said it expected 20% to 25% year-over-year growth in revenue. It projected adjusted earnings before interest, taxes, depreciation, and amortization of between $0 million and $50 million.

“We believe we are now likely to report revenue and adjusted EBITDA below the lower end of the guidance range we provide for this quarter,” Spiegel wrote in Monday’s update.

Spiegel said Snap will continue to recruit new employees, but will slow its hiring pace for the rest of the year. He still expects Snap to hire 500 new employees before the end of the year, according to the note. The company hired about 2,000 employees in the last 12 months.

The maker of the Snapchat app is facing rising inflation and interest rates, supply chain shortages, labor disruptions and changes to platform policies such as Apple’s iPhone privacy feature, according to Spiegel. There is also a negative impact of the war in Ukraine.

“Our most significant gains in the coming months will come as a result of increased productivity from our current team members,” Spiegel wrote.

As of Monday’s close, Snap shares were down more than 50% for the year, while the S&P 500 was down 17% in that period. It fell almost 20% in extended trading on Monday after the company’s announcement.

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