Snap Inc on Thursday fell short of Wall Street estimates for quarterly revenue as the owner of photo messaging app Snapchat said privacy changes implemented by Apple Inc on iOS devices hurt the company’s ability to target and measure its digital advertising.
Shares of Snap dropped 25% in trading after the bell.
The Santa Monica, California-based company said that issue was compounded by global supply chain disruptions and labor shortages, which caused companies to pull back on their advertising spending.
Many of the advertisers who place ads on Snapchat are in the beauty, fashion and consumer goods industries.
Snap said that while the Apple privacy updates, which prevent digital advertisers from tracking iPhone users without their consent, were expected to hurt third quarter results, an ad measurement tool provided by Apple “did not scale as we expected.”
Revenue for the third quarter ended Sept. 30 was $1.07 billion, missing consensus estimates of $1.1 billion, according to IBES data from Refinitiv.
The results for Snap, which is the first of the major social media companies to report earnings, could cast a shadow over Facebook Inc and Twitter Inc, which release third quarter results next week.
Snap said it expects the Apple privacy changes and global supply chain disruptions to linger through the fourth quarter.
Daily active users, a metric watched closely by advertisers and investors, rose 23% year-over-year to 306 million, beating analyst estimates of 301.9 million.
Snapchat has worked to attract and retain users by building new features like the ability to discover restaurants and stores through a map feature, or play virtual games with friends.
The net loss during the quarter was $72 million, or 5 cents per share, narrowing from $199.9 million, or 14 cents per share, in the year-ago quarter.
Snap forecast fourth quarter revenue between $1.16 billion to $1.2 billion, and daily active users between 316 million to 318 million.
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