Snap Inc forecasted a bright future for user growth on its Snapchat app on Thursday, but warned that supply-chain interruptions and inflation could continue to harm ad demand.

Snap’s stock dropped as much as 10 per cent after the announcement, but eventually recovered as investors analysed the mixed data.

Snap expects 343 million to 345 million daily active users in the second quarter, up from 340 million predicted by Wall Street.

Inflation, labour shortages, and other economic issues, however, might put a strain on revenue, according to the corporation. It predicted sales growth of 20 per cent to 25 per cent over the previous year in the second quarter. So far in the current quarter, the growth rate has been 30 per cent.

The Santa Monica, California-based firm is the first of the major internet apps to disclose first-quarter earnings, and the findings might throw a pall over Facebook owner Meta Platforms Inc and Twitter Inc, both of which make money from digital advertising and will post results next week.

In the days following Russia’s invasion of Ukraine in late February, a big number of advertisers halted their ad campaigns, according to Snap Chief Financial Officer Derek Andersen, in prepared remarks issued before an earnings call with analysts.

While the majority of advertisers resumed their ads, many were concerned about inflation and continued geopolitical risk, according to him.

The company’s revenue for the first quarter ending March 31 was $1.06 billion, up 38 per cent over the previous period. According to Refinitiv’s IBES statistics, the figure fell short of analyst projections of $1.07 billion.

Snapchat’s daily active users increased 18 per cent year over year to 332 million, exceeding consensus projections of 329.7 million.

(Adapted from Latestly.com)

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