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Snapchat's daily active users are up 14% year-over-year


The company's Snapchat app has attracted hundreds of millions of users thanks to flashy photo filters and a new AI-powered chatbot that can answer questions, but it has struggled to continually grow revenue and keep up with rivals such as Facebook -owner Meta Platforms that are reaching a much larger audience, raising eyebrows. Questions from analysts and investors about its strategy.

Snap , owner of the picture messaging app, gave weaker guidance for the third quarter than analysts had expected as it races to compete with tech giants for advertising dollars, sending its shares down 18%.

Santa Monica, California-based Snap said it estimated third-quarter revenue at between $1.07 billion to $1.13 billion, and analysts had expected revenue of $1.13 billion, at the upper end of its guidance range .

Similarly, Wall Street expects 406.2 million users in the third quarter, according to IBES data from Refinitiv , but Snap said it expects 405 million to 406 million daily active users.

Snap shares fell 18% to $10.19 in after-market trading following the results, according to gadgets360 .

Snap 's weak outlook "highlights concerns that advertising money will not go to smaller social networks amid the constrained economic environment," said Jesse Cohen, senior analyst at Investing .

And earlier this year, the company updated its machine learning model to present users with more relevant promotions, which Snap said in the short term caused a few of its largest advertisers to see fewer "actions," such as users clicking on ads. more than they did previously.

Advertisers are starting to see the results of the changes, which have led to a 30 percent increase in "purchase-related conversions" compared to the first quarter, Snap told investors.

She added that the improvements also helped Snap increase the total number of advertisers on its platform, although not yet enough to offset reduced ad demand from some of the big brands.

During a conference call with analysts, Snap CFO Derek Andersen said the consumer packaged goods, restaurant and travel industries were strong, but advertisers in other sectors continued to face economic challenges.

However, the tech company beat revenue and user estimates for the second quarter.

Revenue for the quarter ended June 30 was $1.07 billion, beating analysts' expectations of $1.05 billion, according to Refinitiv data .

Snapchat 's daily active users rose 14% year-over-year to 397 million, beating Wall Street's forecast of 394.8 million.

More than 150 million people have also sent more than 10 billion messages to My AI , the ChatGPT -powered Snap bot launched in February, and the company said these conversations will help Snap learn more about users' interests and lead to more relevant ads, adding. It tests sponsored links in my AI responses .

Snap's net loss was $377 million during the second quarter, down from a net loss of $422 million a year earlier.

Many analysts have questioned Snap's plan to spend more on infrastructure, which the company said would cost 79 cents to 84 cents per daily active user in the third quarter, up from 70 cents in the second quarter, and Andersen said the spending is aimed at improving its advertising platform. And increase user interaction with the content.