Snap, the parent company of Snapchat, saw its shares nosediving 20 per cent after missing Wall Street estimates in the first quarter (Q1) earnings.
Snap's revenue dropped 7 per cent to $989 million from $1.063 billion during the year-earlier period, while the net loss narrowed from $360 million to $329 million.
Free cash flow was $103 million, compared to $106 million in the prior year.
Daily active users increased 15 per cent (year-over-year) to 383 million, the company said in a statement.
"Our community continues to grow, reaching 383 million daily active users in Q1, and we are working to deepen engagement with our content platform while building innovative new features and services like My AI," said Evan Spiegel, CEO.
"We are working to accelerate our revenue growth and we are using this opportunity to make significant improvements to our advertising platform to help drive increased return on investment for our advertising partners," he added.
For its second quarter of 2023, Snap gave a projection of $1.04 billion in revenue, lower than the analysts' expectations of $1.10 billion.
Snapchat has launched 'My AI' for all users, a new AI-powered chatbot to make conversational artificial intelligence useful, including relevant AR Lenses and recommendations from the Snap Map.
"Total time spent watching Spotlight content grew more than 170 per cent year-over-year, and Spotlight reached more than 350 million monthly active users on average in Q1, representing an increase of 46 per cent per cent year-over-year," said the company.