Snap Q1 earnings report: users grow but shares drop

Snap Q1 earnings report: users grow but shares drop

Snap Q1 earnings report: users grow but shares drop

For the first time, Snap reported quarterly earnings Wednesday, posting revenue and user growth figures that came in well below Wall Street expectations.

In its first report since floating on the stock exchange, Snap recorded net losses of $2.2 billion, largely due to costs associated with the IPO earlier this year.

The number of users logging into the Snapchat app every day is now 166 million worldwide, a 36 percent increase from the previous quarter. Monness, Crespi, Hardt & Co predicted 173 million, according to Reuters.

One problem has been that Facebook blatantly copied one of Snapchat's best features with its new Stories option on Instagram, now used by around 200 million people. This time last year, Snapchat was adding DAUs at 52 per cent year-on-year.

Snapchat released its quarterly earnings report recently and investors were disappointed by what some termed as disappointing growth.

In North America, which boasts of the company's strongest consumer base, Snap added 3 million daily active users - reaching 71 million daily actives.

Not only did Snap record a $2.2 billion loss for the first quarter, but its revenue was lighter than expected and its user growth decelerated.

Snap's revenue for the first quarter rose 286 percent to almost $150 million, up from $38.8 million in the same quarter a year ago. If that weren't bad enough, average revenue per user (ARPU) in the quarter was 90 cents - a 14% decline from the $1.05 in the fourth quarter. The stock was down 23 percent as the call, a first for CEO Evan Spiegel, chief strategy officer Imran Khan and CFO Drew Vollero, wrapped up Wednesday afternoon.

Analysts say Snap will have to keep doing what it did today on the eve of is conference: introducing new features that make the platform attractive to its user base, so it continues to grow. The company said its users create more than 3 billion snaps daily on average. Its net loss per basic share was $2.31 compared to $0.14 per share in the year-ago quarter. Indeed, eMarketer projects that most of the Snapchat's usage gains in the U.S. going forward will come from older users.

As Facebook keeps copying Snapchat, what can Snapchat do to stay ahead?

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