In a letter to investors, Evan Spiegel, Snap’s chief executive, said the company has “focused on improving our advertising platform” to generate higher returns for advertisers.
Many tech companies that rely on online advertising had seen sales slow last year amid rising inflation and economic uncertainty. The biggest companies, such as Google and Meta, which owns Facebook, WhatsApp and Instagram, began recovering earlier in the year. As a smaller social media company, Snap’s return to growth has been slower.
That led Snap to cut costs. The company recently closed down an augmented reality offering and announced 170 layoffs. Last year, it said it would cut 20 percent of its employees and discontinue at least six products.
Snap “is still a much smaller player than Meta and Google,” said Jasmine Enberg, a principal analyst at Insider Intelligence. “Its ad platform is not quite as advanced and it is playing catch-up to some of its peers in terms of rebuilding that platform.”
Mr. Spiegel has pledged to change Snap’s trajectory. In a memo to employees last month, Mr. Spiegel said he wanted his company to reach the “stretch goal” of 20 percent advertising revenue growth in 2024. The memo was earlier reported by The Verge and confirmed by Snap.