Snap shares plummet 15% after weak second quarter revenue metric

Shares of Snap Inc. experienced a significant drop of 15% on Tuesday after the company announced its second-quarter earnings, revealing that its average revenue per user fell short of expectations. The reported sales saw a year-over-year increase of 9%, but the company also faced a net loss of $262.6 million, compared to a net loss of $248.6 million in the same quarter last year. In terms of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA), Snap reported $41 million, which was below the anticipated $53 million according to StreetAccount. Looking ahead, Snap projected its third-quarter revenue to fall between $1.475 billion and $1.505 billion, slightly above Wall Street's average estimate of $1.475 billion. The company also expects its adjusted EBITDA for the upcoming quarter to be between $110 million and $135 million, outpacing StreetAccount’s forecast of $116 million. Snap's global daily active users are projected to reach 476 million in the third quarter, closely aligning with the expected 475.7 million from analysts. The Snapchat+ subscription service is gaining momentum, approaching 16 million subscribers in Q2, marking a robust 42% growth year-over-year. CEO Evan Spiegel highlighted that this service is a key contributor to the Other Revenue category, which surged by 64% to $171 million. However, Snap's operating expenses also rose by 10% in the second quarter, totaling $654 million. In an effort to streamline operations, Spiegel mentioned a restructuring of engineering teams to better support business functions, with core application teams now reporting to tech chief Bobby Murphy, and the monetization engineering team under business chief Ajit Mohan. This new organizational approach aims to enhance ownership and innovation within the company. Notably, Eric Young, the senior vice president of engineering who joined Snap earlier this year from Google, has decided to leave the company to pursue other opportunities, as revealed by Spiegel. Meanwhile, in the digital ad landscape, competitors like Amazon and Reddit recently reported substantial growth in their ad revenues, indicating a competitive market for Snap ahead.