Monday, 20 November, 2017

Snapchat's user base is loyal, but that might not be enough

Laurie Berry | 19 May, 2017, 23:09

Snap Inc., the parent company formerly known as Snapchat just released its first earnings report since its IPO, and the results aren't pretty. The company had a net loss of $2.2 billion, compared to $104.58 million for Q1 of 2016.

Experts note, though, that much of the loss involves stock-based compensation the company gave out to go public. The operating expenses for the quarter were $196 million. That is an impressive number but again, a lot would depend upon how much of this other revenue came from places other than spectacles. Shares of Snap were down close to 23 percent in after-hours trading.

The question has been whether Snap can quickly grow its user base and, in time, turn a profit. As of March, the company said it had about 161 million daily users. However, for the same period of a year ago, Snapchat observed 52% YoY increase in DAUs. The company has only been public for around a month, and there's still plenty of time for it to smooth things out.

But Snap is still in the shadow of Facebook, which has seen major traction with users and advertisers by ripping off Snapchat's core features.

The firm reported 36 per cent year-on-year growth in daily active users to reach 166m in the first quarter of 2017, below analyst forecasts of 167m users.

Adam Lambert Reacts to 'American Idol' Reboot
The network, which publicly had been courting the singer , made the announcement during its upfront presentation in Manhattan. The "Chained to the Rhythm" star reiterated that she is always dedicated to "highlighting new artists on my tours".

Snapchat has seen increased competition in the past 12 months, with Facebook and Instagram both adding "Stories" - a feature nearly identical to Snapchat's own of the same name. But it's down from Q4, when the average revenue per user was $1.05.

However, analysts had expected faster growth both in user numbers and in revenue per user.

During the investor call, CEO Evan Spiegel also took the opportunity to throw scorn on Facebook's relentless copycat strategy, dubbing it the Yahoo to its Google and suggesting it will win out as the dominant platform. Despite this, only 5m Snaps have been created through the wearables to date, compared to the 3bn sent daily over the application as a whole.

Snap also hopes to enjoy a bump in DAUs from its push into scripted original series, which are so far drawing in audiences of more than 8 million, Spiegel said.

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