The news: Snap delivered its fourth-quarter earnings on Tuesday after markets closed, and gave a first peek at the health of social media platforms as a whole.
The results: The company behind Snapchat generated $1.3 billion in revenues versus an expectation of $1.31 billion. That’s close to flat over Q4 2021’s $1.298 billion.
The problem: With many marketers pulling back, it’s a tough time to be Snap. Meta offers far greater reach with its many platforms, including Facebook, Instagram, and WhatsApp. At the same time, search advertising is closer tied to performance budgets—meaning many companies aren’t lowering their Google spending all that much.
Our take: Snap’s free cash flow in Q4 was $78 million, roughly half of the $161 million it had in the same period the year prior.
Since Snap can’t compete on performance or brand awareness, innovation will be vital to get out of its difficult market position—but that’s difficult to do when growth is hard to come by and cash is getting tighter.
The final word: All that said, it's hard to count a platform out when it has such a loyal following of Gen Z users.
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