×
You will be redirected back to your article in seconds

Snapchat Earnings Disappoint With Slow User Growth, Lower-Than-Expected Revenue

Cue up jokes about disappearing market capitalization: Snap, the company best known for its Snapchat service, reported its first-ever quarterly earnings Wednesday, and the numbers didn’t go over well with investors.

Snap reported $149.65 million in revenue for its Q1 of 2017 Wednesday, compared to just $38.8 million for the same quarter last year. The company had a net loss of $2.2 billion, compared to $104.58 million for Q1 of 2016. However, much of that was due to stock-based compensation, with $750 million alone going to CEO Evan Spiegel. The operating expenses for the quarter were $196 million.

Analysts had expected revenue to come in at $158 million. Shares of Snap were down 23% in after-hours trading.

Investors weren’t only dismayed by Snap missing on revenue, but also by much slower-than-expected user growth numbers. Snapchat’s daily active users grew to 166 million for the quarter. That’s a 36% year-over-year increase, but only a tad better than Snapchat did at the end of last year.

Snap announced at the time of its IPO in March that it had 161 million daily active users on average in December. The company does not provide any monthly active user numbers.

These user numbers are in stark contrast to significant growth at Facebook, Snap’s biggest competitor. Not only is Facebook a lot bigger than Snapchat, attracting 1.28 billion daily active users for its service in Q1, the company also seems to succeed in copying some of Snapchat’s core features.

Facebook announced during its most recent earnings call that its messaging app Whatsapp now has 175 million daily active users for its Snapchat Stories-like Status feature. Facebook previously announced that Instagram’s Snapchat Stories clone is being used by more than 200 million people every day.

A closer look at Snap’s revenue numbers also likely won’t calm the markets. The company generated $0.90 with each user in Q1 of 2017. That’s up significantly from a year ago, when each user only brought in $0.32. But it’s down from Q4, when the average revenue per user was $1.05. Seasonal fluctuation is typical for these revenue numbers, but Snapchat is still early in its monetization strategy, so investors had expected growth to continue.

Snap’s executives did share some positive metrics during the company’s first-ever earnings call: Snapchat’s users spent over 30 minutes per day in the app, according to Spiegel. They also created more than 3 billion snaps every single day.

Also interesting: Snap’s CFO Drew Vollero said that the company generated $8.3 million of “other” revenue during the quarter, which was primarily driven by sales of the company’s Spectacles glasses. This would mean that Snap sold less than 62,000 Spectacles during the quarter.

During Q4 of 2016, when the company first began selling Spectacles, the revenue for this category was north of $4 million. This would suggest that Snapchat has sold fewer than 100,000 Spectacles to date. Vollero went on to call the company’s sales of Spectacles “a very modest program,” and Spiegel said that Spectacles users have taken 5 million snaps to date.

Popular on Variety

More Digital

  • Instagram

    Instagram Testing Hidden Like Counts Globally

    Like counts will be disappearing from Instagram all over the world starting this week: The Facebook-owned photo sharing service is extending its test of hiding like counts to all of its territories, Techcrunch was first to report Thursday morning. Instagram began hiding like counts for a subset of its users in Canada this spring, and [...]

  • Ted Sarandos - Netflix

    Ted Sarandos Says Disney Plus Launch Changes 'Nothing' for Netflix

    Netflix chief content officer Ted Sarandos claims he’s not getting distracted by huge competitors — like Disney — rumbling into the company’s streaming turf. The exec was asked what has changed for Netflix with the Nov. 12 launch of Disney Plus, which the Mouse House boasted as having signed up over 10 million users so [...]

  • Game Awards OrchestraThe Game Awards, Show,

    Game Awards 2019 to Play on 53 Cinemark Screens Alongside 'Jumanji: The Next Level'

    This year’s Game Awards, recognizing the top video games, creators and esports of 2019, is coming to the silver screen. In a three-way partnership, the Game Awards, Cinemark Theatres and Sony Pictures are teaming on a superticket program pairing the Dec. 12 live simulcast of the 2019 Game Awards in 53 Cinemark locations with a [...]

  • Lilly Burns Tony Hernandez

    Jax Media Soars by Amplifying Unique Voices of Auteur TV

    Jax Media has emerged during the past few years as one of television’s busiest and buzziest production companies. The New York-based company headed by four partners — Tony Hernandez, Lilly Burns, John Skidmore and Brooke Posch — has an enviable track record of scouting new voices and executing stylish shows on a less-than-stratospheric budgets. The [...]

  • Variety Digital New Leaders

    Execs From Endeavor Audio, Group Nine Among Those Leading the Way in Digital

    Every year, Variety seeks to identify the next generation of leaders in the entertainment business, looking for representatives in the creative community, film, TV, music and digital. This year’s group has a heavy New York focus: We selected executives from forward thinking companies such as Spotify, Group Nine and Endeavor Audio, as well as writers [...]

  • John Carmack John Carmack, Chief Technical

    Oculus CTO John Carmack to Step Down

    One of the driving forces behind Facebook’s virtual reality efforts is leaving his post: Oculus CTO John Carmack announced Wednesday afternoon that he was transitioning to a “consulting CTO” role this week, and devote most of his time to new challenges outside of the company. “I will still have a voice in the development work, [...]

More From Our Brands

Access exclusive content