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giftedviz.com July 24, 2017


Snap Inc: SNAP Stock Plummets 23% as Investors Write-Down Q1 Financial Results

19 May 2017, 11:12 | Austin Hogan

Snap posts big 1Q loss, higher revenue, misses expectations

Snap shares plunge 20pc as quarterly revenue misses estimates

The owner of Snapchat, the popular disappearing message application, reported a net loss of $2.2 billion in the January-to-March period.

Evan Spiegel, co-founder and chief executive, said on a conference call the company had been working on performance improvements and promoting its Android app, which could offer more growth globally compared with Apple's iOS.

The company has warned that it will take years to be profitable, with analysts not expecting it to break into the black until at least 2019. Its earnings (EBITDA) increased by 102% to US$93 million and average revenue per user rose 181% year on year to 90 cents - down from $1.05 in the previous quarter. In the Rest Of World region, the company reported adding just 1 million users.

"The bottom line is if you want to be a creative company, you got to get comfortable with and basically enjoy the fact that people are going to copy your products if you make great stuff". Companies that tend to have massive user growth and growing revenue streams (Facebook) don't tend to focus as much on how many "snaps" users look at. In addition, it only added 8 million new users quarter-to-quarter, an increase of 5 percent, to 166 million. Its nearest competitor Facebook-owned Instagram now has 700 million users, with its "Stories" feature having 200 million daily active users.

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"Snap user growth is nearly zero". Snap revealed user growth has slowed considerably in its first quarter that ended March 31. This is three times what it was at the same time past year but with a sharp decline from the previous quarter. When questioned about this competition with Facebook Spiegel said that "Just because Yahoo has a search box doesn't mean they're Google".

Snapchat, however, has already been more than eclipsed by Instagram Stories.

During its initial IPO earlier this year, Snap explained that its user growth was somewhat stagnant, but nevertheless, it is still pulling in new users.

For comparison's sake, let's see how other publicly traded companies did in their first earnings report.



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