Snapchat Share Price Drops 42% on $422 Million Q2 Net Loss, Billionaire Founders Bobby Murphy & Evan Spiegel to Take $1 Salary with No Equity Compensation till 1st January 2027
28th July 2022 | Hong Kong
Snapchat share price (Snap Inc) has dropped 42% following announcement of a $422 million 2022 Q2 net loss (21/7/22: $16.35, 28/7/22: $9.38, $15.3 billion market capitalization). In the 2022 Q2 earnings report, billionaire founders Bobby Murphy & Evan Spiegel also announced to take $1 salary with no equity compensation till at least 1st January 2027. Snapchat: “The Board of Directors has also agreed to issue a stock split in the form of a dividend of one Class A share for each then-outstanding share if the Class A share price reaches $40 within the next ten years. The effect of the stock dividend, if paid, would allow Snap’s co-founders to donate or sell additional Class A shares instead of donating or selling Class B or Class C shares. The co-founders currently control over 99.5% of the company’s voting rights.” Both Bobby Murphy & Evan Spiegel are billionaires with personal fortune of more than $2 billion each. Evan Spiegel, Snap Inc CEO: “While the continued growth of our community increases the long-term opportunity for our business, our financial results for Q2 do not reflect our ambition. We are evolving our business and strategy to reaccelerate revenue growth, including innovating on our products, investing heavily in our direct response advertising business, and cultivating new sources of revenue to help diversify our top line growth.” View Snapchat Investor Letter Q2 2022
“ Snapchat Share Price Drops 42% on $422 Million Q2 Net Loss, Billionaire Founders Bobby Murphy & Evan Spiegel to Take $1 Salary with No Equity Compensation till 1st January 2027 “
Snap Inc Investor Letter Q2 2022
The second quarter of 2022 proved more challenging than we expected. Revenue grew 13% year-over-year to $1.11 billion, which resulted in adjusted EBITDA of $7 million and free cash flow of negative $147 million. Daily active users (DAU) grew to 347 million, an increase of 54 million or 18% year-over-year in Q2. We also observed a number of encouraging engagement trends across our platform, including growth in overall content engagement. While the continued growth of our community increases the long-term opportunity for our business, our financial results for Q2 do not reflect the scale of our ambition. We are not satisfied with the results we are delivering, regardless of the current headwinds.
From 2018 — our first full year as a public company — through the end of 2021, our revenue grew at an average compound annual rate of more than 50%. The rapid growth of our top line has been fueled by our fast-growing community, deep engagement with our platform, and a robust advertising business that has driven measurable returns for our advertising partners. However, over the past year, a series of significant headwinds have emerged that have disrupted this momentum.
Platform policy changes have upended more than a decade of advertising industry standards, and macroeconomic challenges have disrupted many of the industry segments that have been most critical to the growing demand for our advertising solutions. We are also seeing increasing competition for advertising dollars that are now growing more slowly. Our revenue growth has substantially slowed, and we are evolving our business and strategy to adapt. We are working to reaccelerate growth and take share, but we believe it will likely take some time before we see significant improvements.
To return to a higher rate of long-term revenue growth, we are focusing on three priorities. First, we will continue to invest in our products and platforms to sustain the growth of our community. Second, we will invest heavily in our direct-response advertising business to deliver measurable returns on advertising spending. Lastly, we will cultivate new sources of revenue that will help diversify our top-line growth to build a more resilient business.
We also intend to recalibrate our investment levels to build a path to free cash flow break-even or better, even with reduced rates of revenue growth. We will continue to invest with a long-term perspective, especially in areas that are critical to realizing the long-term opportunity of augmented reality, but we are taking a hard look at how to better drive productivity across our teams. This will include a substantially reduced rate of hiring and a strict reprioritization of goals and initiatives across the company. We will also implement a stock repurchase program designed to offset the impact of dilution from our stock-based compensation program to protect the long-term value of our business for our investors. We expect to emerge from this recalibration as a more focused and more productive organization that is well positioned to capture the long-term growth opportunity we see ahead.
About Snap Inc.
Snap Inc. is a camera company. We believe that reinventing the camera represents our greatest opportunity to improve the way people live and communicate. We contribute to human progress by empowering people to express themselves, live in the moment, learn about the world, and have fun together. For more information, visit snap.com.
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