Snap Inc. said in an earnings call Thursday that Apple’s App Store privacy changes had caused the company to fail to meet revenue expectations for its third quarter.
Shares of the company tumbled 25% on Thursday after Snap CEO Evan Spiegel said Apple’s ATT hurt the company’s ability to target and measure digital advertising.
The Santa Monica, California-based social media company said revenue was $1.07 billion, up 57% for the three months ending Sept. 30, slightly below analysts’ expectations and its own guidance, but it expects expansion to slow. The number of daily users increased by 23% to reach 306 million.
Spiegel said on the call that Apple’s privacy changes hampered the ability for companies to measure the performance of their ads, upending many of the ways advertisers have been accustomed to doing business for decades.
“While we anticipated some degree of business disruption, the new Apple-provided measurement solution did not scale as we had expected, making it more difficult for our ad partners to measure and manage their ad campaigns for iOS,” Snap said.
“This has definitely been a frustrating setback for us,” Spiegel said.
Spiegel stated that this effect caused by Apple’s ATT is temporary and it “just takes time” to adapt to the new normal. To deal with the problem, Snap said it is developing additional first-party tools to help its ad partners achieve their goals. However, the company also underlined that supply-chain and labor-market shortages indirectly affect its ad business.
“This in turn reduces their short-term appetite to generate additional customer demand through advertising at a time when their businesses are already supply-constrained,” Snap said.
“While it is difficult to predict the trajectory of these challenges, the growth of our audience, the adoption of our new products and platforms by our community, and the underlying efficacy of our advertising products for performance advertisers gives us confidence in the future of our business and our ability to navigate this environment as we continue to invest in our long-term vision,” Spiegel said.
Shares in other social media companies also fell after Snap’s report on Thursday. Facebook’s stock price fell more than 6%, and Twitter’s shares fell down 7% on Thursday.