(Reuters) – Snap Inc (SNAP.N) missed Wall Street estimates for fourth quarter revenue on Tuesday, hurt by a shorter holiday season, sending its shares down 12%.
FILE PHOTO: A woman stands in front of the logo of Snap Inc. on the floor of the New York Stock Exchange (NYSE) while waiting for Snap Inc. to post their IPO, in New York City, New York, U.S. on March 2, 2017. REUTERS/Lucas Jackson/File Photo
Snap, which owns the popular photo messaging app Snapchat, had earlier warned its peak advertising demand period, which runs between the Black Friday and December holidays, had one fewer week.
Revenue, which the company generates from selling advertising on Snapchat, rose 44% to $560.88 million, but missed the average analyst estimate of $563.03 million.
The app faces tough competition from Alphabet Inc’s (GOOGL.O) Google and Facebook (FB.O), which command a huge portion of the digital advertising market.
Snapchat has only 0.5% of worldwide digital ad revenue, while Facebook accounts for 21.1%, according to a report by market researcher eMarketer.
Despite stiff competition from Facebook’s Instagram and newer apps like TikTok for user’s screen time, Snap said its daily active users (DAU) rose 4% to 218 million in the three months ended Dec. 31, from the prior quarter.
The user metric stood at 186 million a year earlier.
DAU, which represents the number of people using the app on a daily basis and is a widely watched metric by investors and advertisers, was above analysts’ average estimate of 215.04 million, according to IBES data from Refinitiv.
Average revenue per user jumped 23% to $2.58 during the quarter from a year earlier.
“Given the substantial long-term opportunities ahead, we are working hard to scale our revenue so that we are able to self-fund our investments in the future,” Chief Executive Officer Evan Spiegel said in prepared remarks.
Snap’s net loss widened to $240.7 million, or 17 cents per share, from $191.67 million, or 14 cents per share, a year earlier.
The company expects first-quarter revenue in the range of $450 million to $470 million. Analysts on average were expecting $461.6 million.
Reporting by Amal S in Bengaluru and Sheila Dang in New York; Editing by Shinjini Ganguli and Tom Brown