Friday, 17 August, 2018

Snapchat drops daily users for first time after controversial redesign

Jamie McCarthy  Getty Images for Tribeca Film Festival Jamie McCarthy Getty Images for Tribeca Film Festival
Ginger Lawrence | 08 August, 2018, 16:26

This appeared to confuse the market initially, who rallied behind Snap's share price initially in after-hours trading, but it seems likely this will only be a temporary reprieve before the company gets purchased by AOL, like all eventually defunct web brands.

The earnings report didn't have any specific sales figures for its latest Spectacles hardware, though it did report $2 million in non-advertising revenue.

Saudi Arabia's Prince Alwaleed bin Talal has bought a 2.3% stake in Snap - the company behind Snapchat - for $250m (£193m).

However, the firm reported its first-ever decline in quarterly users.

Spiegel said Snapchat's drop in daily users "was primarily driven by a slightly lower frequency of use among our user base due to the disruption caused by our redesign".

Snap also has been redesigning its app to encourage users to interact with more of its ad-supported videos.

Second-quarter revenue of $262 million compared with $182 million in the same period a year ago, with a loss down to $358 million from $449 million.

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The platform has been under pressure from Facebook's line-up of apps, which have aggressively competed with Snapchat for millennial social media users in recent years. Revenue was forecast at $251.2 million.

Analysts on average expected Snap to gain almost 2 million users in the second quarter from the first.

The new design, which was reportedly spearheaded by Spiegel himself, prompted an outpouring of anger from users nearly immediately. "We saw and continue to see Snap as a niche platform".

Snap has been working to convince big advertisers to spend more of their budgets on Snapchat ads and reach the app's base of mainly 18-34-year-old users, and it beat analyst revenue forecasts as it drew in more global and small business advertisers.

Snapchat has more than 100 million monthly active users, the company said, even though that was typically a metric it never cared about.

Snap said ending leases in Venice, California, to consolidate offices a few miles north in Santa Monica cost it $3.9 million in the second quarter and would result in total expenses of $25 million to $45 million in 2018, mostly in the current quarter.