The new round of layoffs announced this Monday was already a bad omen. Confirmation that things are not going well at Snap came this Tuesday with the presentation of the closing results for 2023 and the forecasts for the beginning of 2024. The figures in disappointed investors and Snap shares have plummeted further of 30% on the Stock Market outside normal trading hours.
The group's revenue was $4,606 million in 2023, almost identical to $4,602 million in 2022. Net losses narrowed to $1,322 million, down from $1,430 million the previous year. The company founded and directed by Evan Spiegel highlights that it achieved a positive adjusted gross operating result for the fourth consecutive year, with 162 million dollars in 2023. And that it also obtained positive operating cash flow for the third year, this time of 247 million Dollars.
The company experienced revenue declines in the first half of 2023 and growth in the second half. The increase was 5% in the fourth quarter and will accelerate at the start of this year. However, even in this way the company will not find the path to profitability, which is what investors are increasingly concerned about. “Our revenue forecasts range from $1.095 billion to $1.135 billion, representing 11% to 15% year-over-year growth. “Based on this revenue range and our investment plans for the quarter, we estimate that adjusted gross operating income will be between negative $55 million and negative $95 million in the first quarter,” The company has reported to the Securities and Exchange Commission (the SEC).
The figures have not convinced the market and Snap shares, which had appreciated more than 40% in the last 12 months, have lost around a third of their value in trading after the formal close of the session.
“2023 was a pivotal year for Snap as we transformed our advertising business and continued to expand our global community, reaching 414 million daily active users,” said CEO Evan Spiegel. “Snapchat enhances relationships with friends, family and the world, and this unique value proposition has provided a solid foundation to build our business for long-term growth.”
The company informed the SEC this Monday that it has made the decision to cut its global workforce by 10%. That means just over 500 layoffs, according to the latest workforce figures published by the company. “The team members affected by these changes are kind, intelligent and creative colleagues who have contributed significantly to our business during these difficult times, and we are committed to supporting them in their transition,” says Spiegel in his quarterly letter. “While this decision has been painful and we will miss our friends and colleagues, we believe these changes are necessary to achieve our long-term goals and effectively manage our share-based compensation expenses. “We look forward to becoming a more agile and focused company, better positioned to serve our community, deliver results for our partners and take advantage of the long-term opportunities we see in our business.”
The company already announced the layoff of 20% of its workforce in August 2022, upon verifying that revenue growth had slowed. Then the crisis worsened with the first drops in turnover in its history. Snap shares, which topped $80 in September 2021, sank below $8 in the spring of last year. However, since in October it reported that it was returning to revenue growth after several quarters of decline, its shares reacted upward.
When it went public in 2017, Snap was a company with exponential growth. That growth was losing strength, but it was still maintaining a good pace at the beginning of 2022, when it came to a screeching halt.
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