Snap Loses Revenue Due To Russian Invasion And Forced New Hiring Postpones

Snap reported first-quarter earnings that missed Wall Street expectations. (photo: doc. unsplash)

JAKARTA - This year is unlikely to be Snap's luck, as Snap CEO Evan Spiegel said the company will miss its own targets for revenue, and adjusted revenue in the current quarter.

The social media company will also slow down hiring until the end of the year as it appears to prefer to manage spending.

"Today we filed an 8-K, sharing that the macro environment has deteriorated further and faster than we anticipated when we issued our quarterly guidance last month," Spiegel wrote in a memo to employees.

"As a result, while our revenue has continued to grow year over year, growth has been slower than we currently expect."

Part of the letter was filed with the Securities and Exchange Commission. In April, Snap reported first-quarter earnings that missed Wall Street expectations for sales and profit.

At that time, the company expects revenue growth of between 20 percent and 25 percent year over year (YoY). By estimating adjusted income before interest, tax, depreciation and amortization between US$0 and US$50 million, the equivalent of Rp730 billion.

"We believe it is now likely that we will report earnings and adjust EBITDA below the guidance range we provided for the quarter," Spiegel said.

Launching TechCrunch, Wednesday, May 25, Spiegel admitted, Snap's revenue had fallen due to inflation, as well as the impact of the war in Ukraine. Meanwhile, Snap CFO Derek Andersen previously said that after the Russian invasion last February, many advertisers stopped their campaigns, but within 10 days, most advertisers resumed them.

Snap has also stopped advertising in Russia, Ukraine and Belarus, they will not accept ads from Russian state-owned entities.

In addition, Spiegel indicated last year's iOS privacy changes continue to affect the company. After iOS users were given the option of opting out of tracking outside of the app, most users opted not to hand over more personal data to the apps they use, this impacting the advertising business of social apps like Snapchat and Facebook.

According to the memo, Snap plans to recruit more than 500 team members this year, in addition to the 900 offers it has already received. That's a 41 percent increase in hiring YoY, but not as many new hires as the company plans as it drives some planned hiring through 2023.

Hundreds of jobs are currently listed on Snap's website, including 55 roles in augmented reality, Snap's growing business sector. Unfortunately, this golden opportunity has not been pursued by companies that prefer to review their budgets, and find ways to cut costs.

“Managing our spending responsibly will allow us to invest through this time period and emerge stronger as a business,” said Spiegel.

"Going forward, we will take steps to re-prioritize our investment, continuing to invest across our business priorities, but in many cases doing so at a slower pace than we planned given the operating environment."