Snap, the parent company of Snapchat, saw its shares plunging over 25 per cent in after-hour trading after it reported a net loss of $422 million compared to $152 million in the prior year as the company "substantially" reduced hiring. "Our financial results for Q2 do not reflect the scale of our ambition. We are not satisfied with the results we are delivering," Snap CEO Evan Spiegel said after delivering the second quarter (Q2) results late on Thursday.

The daily active users (DAUs) increased 18 per cent (year-over-year) to 347 million in Q2 while revenue increased 13 per cent to $1.11 billion, up from $982 million in the same period last year. "We are evolving our business and strategy to reaccelerate revenue growth, including innovating on our products, investing heavily in our direct response advertising business, and cultivating new sources of revenue to help diversify our topline growth," said Spiegel.

The daily average number of Snapchatters aged 25 and older engaging with shows and publisher content increased by more than 40 per cent year-over-year. To ramp up profits, the company last month announced that it is launching Snapchat Plus, a collection of exclusive, experimental, and pre-release features available on the platform, for $3.99 per month.

In May, Snap announced to slow down hiring this year. Spiegel told employees that the company plans to hire 500 people this year, versus 2,000 it hired over the past 12 months, after warning investors that its revenue wouldn't grow as fast as expected, reports The Verge. "We expect to hire more than 500 new team members between now and the end of the year, representing nearly 10 per cent company-wide headcount growth over the next seven months," Spiegel said.

Like many companies, Snap continues to face rising inflation and interest rates, supply chain shortages and labour disruptions, platform policy changes, the impact of the war in Ukraine, and more. "As a result, while our revenue continues to grow year-over-year, it is growing more slowly than we expected at this time," said the Snap CEO.

"We will slow our pace of hiring for unopened roles for the remainder of the year, as well as push some planned hiring into next year." The company will also evaluate the remainder of its 2022 budgets and leaders have been asked to review spending to find additional cost savings.