In an earnings call Thursday, Snap said that it failed to meet revenue expectations for its third quarter. Snap reported $1.07 billion in Q3 revenue, missing Wall Street’s hopes that the company would bring in $1.1 billion.
The company notched 306 million daily active users, up from the 293 million it reported in Q2. That growth isn’t stratospheric, but it looks plenty healthy for a platform that risked falling out of relevance entirely not long ago.
Snapchat attributed the revenue miss to Apple’s big iOS privacy change, which put new restrictions in place for apps seeking to track user behavior beyond their own borders. On the call, Snap CEO Evan Spiegel noted that the company was caught off guard by how disruptive the impact on advertiser tools proved to be. Without the wide view that many advertisers were accustomed to, they had to adapt to new, more restrained ways of measuring user behavior. “Those tools were essentially rendered blind,” Spiegel said.
Spiegel framed the dent in Snap’s business as temporary, noting that adapting to the new normal “just takes time” and the long-term impact from Apple’s ad changes remains to be seen. He also observed the role of broader pandemic market trends in Snap’s underperformance.
Snap isn’t the only ad business adjusting to the iOS changes, which are a huge boon for user privacy. Facebook also warned that it expects to see a significant impact in Q3 due to Apple’s new policies, which dampened the company’s ability to target ads.
Unsurprisingly, most people opt out of cross-platform tracking that ad businesses like Snap and Facebook rely on when presented with the choice. Unlike Facebook’s leadership, Spiegel has consistently been supportive of Apple’s decision to build more privacy into its mobile operating system in spite of how those changes might affect Snap’s bottom line.