Snap misses revenue expectations of $989 million in the first quarter and issues a warning about the second quarter outlook.

The second quarter internal revenue forecast for Snap is $1.04 billion (roughly Rs. 8,502 crore), which represents a 6% year-over-year decline.

As a result of changes to its advertising platform, Snap’s quarterly revenue fell short of analyst expectations on Thursday. The company also issued a warning that the following quarter’s results might not meet Wall Street’s expectations.

Snap’s stock fell 19 percent in after-hours trading.

The Santa Monica, California-based company that owns the photo messaging app Snapchat has a long history of pioneering social media trends that larger competitors have since copied, but it has come under scrutiny from investors over whether it can generate revenue growth from its investments in cutting-edge technology like augmented reality (AR).

However, Snaap’s internal revenue forecast for the second quarter is $1.04 billion (roughly Rs. 8,502 crore), which represents a 6% year-over-year decline. Snap stated that it was not providing formal financial guidance. According to IBES data from Refinitiv, the internal forecast is less than the $1.13 billion (roughly Rs. 9,239 crore) analyst expectations.

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Snap stated in a letter to investors that it was taking steps to enhance the relevance of ads displayed to users and streamline user interaction with Snapchat ads.

Fewer “actions,” such as users tapping on ads, are being seen by some of Snaap’s biggest advertisers as a result of the changes, according to Snap.

The business predicted that it would take some time for its ad systems to adapt to the updates and produce better-performing ads.During an earnings conference call with analysts, Snap Chief Executive Evan Spiegel stated, “We are optimistic that our ad platform improvements are laying the foundation for future growth.

Contrarily, the two biggest digital ad platforms in the world, Alphabet and Meta Platforms, reported positive first quarter results this week as businesses flocked to them for their broad consumer reach and sophisticated ad tools.

The revenue for Snap’s first quarter, which ended on March 31, was $989 million, falling short of analyst expectations of $1.04 billion and down from the $1.06 billion (roughly 8,667 crore) in the corresponding period last year.

The decline in Snap’s revenue “is a signal of deep challenges at the company,” according to Insider Intelligence principal analyst Jasmine Enberg.

“Snapchat users primarily use the app for messaging, and messaging apps are notoriously difficult to monetize,” she claimed.Snap’s net loss for the quarter was $329 million (roughly Rs. 2,689 crore), down from $360 million (roughly Rs. 2,943 crore) the previous year.

Along with AR, Snap has increased its investment in artificial intelligence and recently expanded its My AI chatbot to all Snapchat users worldwide.

Snap also announced My AI will be able to respond to user messages with a fully AI-generated image at an annual gathering for content creators, advertisers, and other partners last week.

On Thursday, Spiegel stated that the company is in the early stages of testing sponsored links in text generated by My AI.In line with Wall Street predictions, the number of daily active Snapchat users increased by 15% on an annual basis to 383 million.

Between 394 million and 395 million daily active users are what Snap anticipates for the second quarter.Additionally, Pinterest Inc. on Thursday predicted second-quarter revenue below market expectations, and its shares dropped 13% in after-bell trading.

Following their results on Thursday, Snap and Pinterest’s combined stock market value decreased by more than $4 billion (or approximately Rs. 32,702 crore).