Home BUSINESS Looming Apple privacy changes weigh on Snap despite revenue growth

Looming Apple privacy changes weigh on Snap despite revenue growth


February 4, 2021

By Sheila Dang

(Reuters) – Snap Inc, owner of popular photo-messaging app Snapchat, on Thursday warned that upcoming privacy changes by Apple Inc could hurt Snap’s ad business although fourth-quarter results beat analysts’ estimates for user growth and revenue.

Snap stock declined 7% to $54.02 in trading after the bell.

Snap said Apple’s planned privacy changes, which will ask iPhone users to consent to personalized ads, could present a “risk” to advertiser demand, but added it was unclear how the changes could affect Snap’s business in the long-run.

“The disruption to ad targeting caused by the iOS 14 privacy changes will clearly be a worry for Snap, which has been steadily growing its armory of ad formats and advertisers,” said Tom Johnson at ad agency Mindshare Worldwide.

Facebook Inc has been waging a public fight against Apple’s changes, accusing the iPhone maker of anticompetitive behavior and hurting the social media company’s ad-targeting business.

Snap’s daily active users (DAUs), a metric watched by investors and advertisers, rose 22% year-over-year to 265 million in the fourth quarter. 31. Analysts had expected 258 million, according to IBES data from Refinitiv.

The app made the biggest gains in regions outside North America and Europe, with 55% growth in daily active users.

Revenue, which Snap generates mainly from ad sales, grew 62% to $911 million, easily beating Wall Street’s consensus estimate of $857.4 million.

Advertisers have been drawn to Snap’s young audience, and the company has developed features that appeal to brands including Snap Map, which lets users find local businesses near them.

Snap’s net loss narrowed to $113 million, or 8 cents per share, from $240.7 million, or 17 cents per share, a year earlier.

The company forecast first-quarter daily active users to grow 20% year over year to 275 million, and revenue to be between $720 million to $740 million.

(Reporting by Sheila Dang; Editing by Cynthia Osterman)