Published: Thu, August 09, 2018
Money | By Armando Alvarado

Snapchat Loses 3 Million Daily Users, But Posts Q2 Earnings Beat

Snapchat Loses 3 Million Daily Users, But Posts Q2 Earnings Beat

Prince Alwaleed bin Talal has just bought a 2.3% stake in Snap, Snapchat's parent company, to the tune of $250m (£190m).

Snap Inc. reported on Tuesday that its number of daily active users fell by 2% to about 188 million, marking the first time the company has lost daily users since the company was founded in 2011.

The overhaul of the once fast-growing app turned some users away, and more people are flocking to Facebook Inc.'s Instagram, which has successfully copied Snap's most popular features. Its shares are down almost 10% for the year, as of Tuesday morning, while Facebook (FB) stock is up 5% despite a quarterly bloodbath last month. The three months ending in June was the first full quarter in which all users shifted to a new version of Snapchat that separates content from a user's friends and from public figures. But the closely followed average revenue per user increased to $1.40 from $1.05 in the same quarter a year ago. Analysts on average expected Snap to gain almost 2 million users in the second quarter from the first quarter, according to Thomson Reuters I/B/E/S.

Shares in Snap climbed more than 12 percent in after-hours trading before reversing course.

Snap said Tuesday that third-quarter revenue would be $265 million to $290 million.

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Snap had never before logged a quarterly drop in daily users, according to data it has released going back to 2014. Revenues were also better than anticipated, coming in at $262 million where analysts had expected $250 million.

"We thought the commentary around the Android rebuild indicated that we might be waiting about a year before we can expect to see the benefit from those efforts (and in the near term, DAUs should be down again next quarter)", Mark Kelley, an analyst at Nomura Instinet, said in a note to clients Wednesday.

Snapchat later made some changes, but in the months following, over 1.2 million users around the globe signed a petition, asking the company to revert back told the old design.

Since then, the company has also launched a second-generation pair of its Spectacles, camera-enabled sunglasses that can upload content directly to Snapchat, in an attempt to diversify beyond software.

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