Wednesday, 23 August, 2017

Snap added fewer users and made less money than Wall Street expected

Tristan Harris Tristan Harris
Lance Thomas | 12 August, 2017, 00:11

Market watchers had expected the ranks of users to grow to 175 million, with Snap missing the mark.

Also adding to the uncertainty were signals that Snap was focusing on controlling costs rather than expanding its user base outside of North America and Europe. The app's advertising revenue is growing - Snap made $US181.7 million ($231.2 million) last quarter - but the company still fell short of analysts' estimates.

But it wasn't all bad news.

Snapchat said revenue over the three months to the end of June was $181.7m, more than double the same period in 2016.

Spiegel has been urging investors to think of Snap as different from Facebook.

The best thing Snapchat can do now is to do what it never wanted to do: Play the Wall Street expectations game. On a GAAP basis, Snap is expected to post a loss of $359 million. Instagram now has almost 700 million users globally.

Even before the earnings report, Snap's stock had already fallen off a cliff since its hotly anticipated initial public offering earlier this year.

The anemic growth renews investor concerns that the messaging platform is struggling to grow into a mainstream service in the face of fierce competition from Facebook.

Employees will be able to publicly sell their shares for the first time next week, presenting another test of confidence in the company. All CEO Evan Spiegel has to do is something he has disparaged since the company was founded: sell out ... to Alphabet Inc (NASDAQ:GOOGL), no less.

250 million Snaps are saved to Memories each day. He also said that 25% of people in the US, UK and France with smartphones use Snapchat every day.

The number of users climbed more than 20% year-on-year.

Publisher Story views are up 30 percent quarter-over-quarter.

The company hasn't put ads in Maps, which highlights the locations of a user's friends and interesting locales around the world.

Additionally, Spiegel said the company is working to stabilize the backend infrastructure of Snapchat's Android app. Instagram Stories now has 250m active daily users while Snapchat has stalled at 166m. Investors have been anxious about the volatility of the stock, with a post-IPO ban on employees selling shares expiring on Monday. "We believe deeply in the long term success of Snap", he said.

But experts aren't impressed that Snap can't generate steady sales growth - "there is little excuse at this late in the game", James Cakmak of Monness, Crespi, Hardt & Co. said ahead of the earnings release. Snap's ad business has been off to a slow start, but this uptick in the automated selling of its ad inventory is a good sign that its fast growth will continue.

TRADEMARK VIOLATION WARNING: This piece was originally posted by Transcript Daily and is owned by of Transcript Daily. That growth rate is down by 0.8% from 5% growth of the previous quarter.

Snap spent "slightly more" than 200 million in cash on acquisitions during the second quarter, but it wouldn't say exactly how that money was spent.

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