UPDATED with executive comments: Snap Inc., already in the harsh Wall Street spotlight due to mounting complaints about its redesign last fall, released first-quarter results that included the lowest sequential growth in daily active users in the company’s history.
The global user base grew 15% from the year-ago period to reach 191 million, but on a sequential basis, the 191 million was up just 4 million from levels in the fourth quarter of 2017. In North America, the user increase was even slimmer, up 1 million to 81 million.
Advertising gains helped total revenue leap 54% to $230.7 million, and the company posted an adjusted loss of 17 cents per share. While the loss was narrower than the year-ago mark, it undershot the 16-cent loss expected by Wall Street analysts. Revenue also fell about $13 million short of the consensus.
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The news hit Snap’s beleaguered shares with full force. They closed the trading session at $144.13, down 1%, before plummeting more than 15% after hours to flirt with their 52-week low of $11.28.
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Two of Snapchat’s closest rivals, Instagram Stories and WhatsApp Status, have daily user bases of 300 million and 450 million, respectively. The fourth quarter of last year was when Snap unveiled its redesign, which has drawn criticism from celebrity users such as Kylie Jenner and Chrissy Teigen. Complaints have centered on the new interface making it more difficult for users to find their actual friends instead of accounts recommended for them.
Last week, the social network said it was testing a modification of the new design (a re-redesign) meant to address the backlash.
During a conference call this afternoon with Wall Street analysts, founder and CEO Evan Spiegel faced numerous questions about the state of the Snap interface. He remained sanguine about the company’s “progress” in trials of the redesigned redesign, though he declined to offer specifics. As to the issue of blending brand and influencer content with user-generated, friends’ content, he said a more coherent and balanced experience was on its way. “We’re going to get the best of both worlds and still get an environment where people feel empowered to express themselves,” he said.
Spiegel expanded on that theme further when asked about the relationship on the platform between sponsored content and users’ personal connections. User-generated content, he said, has been a “strong suit for us for a very long time because we’re so focused on powering creativity, opening to the camera and building all these creative tools that inspire people to create. I think, as we look at the redesign and the opportunity for publishers and creators, we’re excited about the progress we’ll be able to make on both. Last year, we delivered more than $100 million in revenue to our partners and we’re excited to build on that.”
The restiveness about Snap’s performance and the redesign of Snapchat seems distinctly at odds with the rapture during the NewFronts presentations taking place this week in New York. Many digital companies, especially arms of established players such as Viacom and Condé Nast, have been trumpeting their development of Snapchat content, even if behind the scenes the anxiety level is apt to be rising.
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