Snapchat’s user growth slowed to its lowest pace in years, as parent company Snap Inc. missed Wall Street expectations for its first quarterly earnings as a public company on Wednesday, sending its shares plunging more than 20% in after-hours trading.
Snap added 8 million new daily users in the first three months of the year, representing year-on-year growth of 36%. At this time last year, Snapchat was growing its DAUs by 52%.
Snapchat’s weak user growth comes as Facebook has intensified its mimicking of the Snapchat Stories format across its suite of apps. Instagram Stories recently outpaced Snapchat by reaching 200 million daily users.
Snap said that its hefty net loss of $2 billion during the quarter was attributed to stock-based compensation related to its February initial public offering.
Here are the key numbers from Snap’s Q1 earnings:
- EPS (adjusted): Net loss of $0.20 vs. $0.16.
- Revenue: $149.6 million vs. $159 million expected, up 286% from $39 million in the year-ago period.
- Daily active users: 166 million, an increase of 36% from 122 million in the year-ago period.
- Net loss: $2.2 billion.
Earnings call live blog:
- CEO Evan Spiegel kicked off Snap’s first earnings call with investors by saying that the past quarter has been focused on “working on the quality of the Snapchat application,” specifically on Android. Snap noted in February that Android bugs had contributed to its slowed user growth in Q4.
- 30% of new Snapchat users during the quarter were on Android, up from 20% in the previous quarter.
- Spiegel called Snapchat’s recently announced search feature “exciting” because it surfaces the “so-called long-tail of content on our service.” Snapchat users can search for crowd-sourced stories based on a range of topics, from tourist attractions to concerts.
- 3 billion messages, or “snaps,” are sent on Snapchat every day, up from 2.5 billion in the previous quarter.
- Spiegel finished his comments by summing up Snap’s work during Q1 in three words: “performance, quality, and automation.”
- Snap chief strategy officer Imran Khan, who leads the ad business, revealed that users spend 30 minutes per day in the app on average.
- He touted that 21 million people watched Snapchat’s Oscars story, which received 250,00 submissions from Snapchat users. “The power of these stories is resonating with our community,” he said.
- Khan highlighted the company’s recent ad tech rollouts, including the emphasis its placed on programmatic advertising and self-service tool for small businesses.
- He called the “Snap to Store” ad offering, which ties campaigns back to foot traffic in physical stores, the “holy grail of ad measurement.” A Hollister campaign found that 63,000 Snapchat users visited its stores after viewing related ads in the app.
- The $8.3 million in non-advertising revenue Snap generated was primarily driven by its Spectacles eyewear, according to CFO Drew Vollero.
- Snap has 2,360 employees, up from 1,859 at end of 2016.
Here are some charts from Snap’s Q1 earnings:
This story is developing. Check back for updates.