×

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.

More Digital

  • The Lion King

    ‘The Lion King’ Tops Studios’ TV Ad Spending

    In this week’s edition of the Variety Movie Commercial Tracker, powered by the always-on TV ad measurement and attribution company iSpot.tv, Walt Disney Pictures claims the top spot in spending with “The Lion King.” Ads placed for the remake had an estimated media value of $5.64 million through Sunday for 1,290 national ad airings on [...]

  • Apple Plans to Fund Podcast Exclusives:

    Apple Reportedly Plans to Fund Original Podcasts

    Apple has plans to open its checkbooks for podcasts that would be exclusive to its podcasting apps, Bloomberg reported Tuesday. The investments would help the company defend its market leadership in an increasingly crowded field, and fend off competitors like Spotify, Pandora and Luminary. News of the plans sent Spotify’s stock down more than 3%; [...]

  • LiveXLive Names AOL and MTV Vet

    LiveXLive Names AOL and MTV Vet Dermot McCormack President

    Live entertainment digital media company LiveXLive Media today announced that AOL and MTV veteran Dermot McCormack has been named president of the company. According to the announcement, McCormack will lead the business and creative operations of LiveXLive, effective immediately. McCormack previously served as AOL’s Global President of Video and Studios, where he oversaw the video [...]

  • Recording Studio

    Cloud-Based Music Mastering Platform Landr Raises $26 Million

    Cloud-based music mastering and distribution platform Landr has raised a $26 million Series B round of funding. The new founding round was led by the Sony Innovation Fund, microphone manufacturer Shure, state-owned financing corporation Investissement Québec and Fonds de solidarité FTQ. Warner Music, Plus Eight Equity Partners, Slaight Communications, YUL Ventures and PEAK Capital Partners [...]

  • NBC News - Quibi

    NBC News to Produce Two Daily Shows for Jeffrey Katzenberg’s Quibi

    NBC News has joined Quibi’s ambitious bid to build a mobile subscription TV service. NBCUniversal’s news division plans to build a custom set at 30 Rock where it will produce daily morning and evening newscasts, seven days per week, for Quibi, the well-funded mobile video startup from chairman Jeffrey Katzenberg and CEO Meg Whitman. The [...]

More From Our Brands

Access exclusive content