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

Snap will report quarterly results today Facebook and Twitter’s debacles cast a shadow

The company has not been growing well for some time now, and now for the first time is losing daily active users, dropping from 191 million in the first quarter of the year, to 188 million in the last quarter.

The disappointing user metric came as Snapchat faces mounting competition from Instagram.

On the upside, the company reported second quarter revenues of $262.3m against analyst estimates of $249.8m, up 44% over the same period a year ago, and a loss of $0.14 earnings per share against a loss estimate of $0.18.

Snap forecast third-quarter sales of $265 million to $290 million, up 27 percent to 39 percent from a year earlier, compared with 44 percent revenue growth in the second quarter. This was primarily driven by a slightly lower frequency of use among our user base due to the disruption caused by our redesign.

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. Snap had never before logged a quarterly drop in daily users, according to data it has released going back to 2014.

In prepared remarks in a call with analysts, CEO Evan Spiegel attributed this drop-off to the app redesign: "While our Monthly Active Users continued to grow this quarter, we saw a 2 percent decline in our Daily Active Users".

The Los Angeles company beat Wall Street's expectations for both revenue and losses.

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.

Snapchat is dogged by numerous same issues it has always been: an appeal to teens and young adults but limited attributes for significant take-up beyond those age groups.

The drop in daily active users is an unfortunate turn for the company, as it struggled with a tepid reaction to its app redesign late previous year as well as continuing problems with its Android app. Users spend an average of over 30 minutes on Snapchat every day, he added, and user retention for people older than 35 has increased more than 8 percent.

Employees had griped about Snap's network of small, spread out offices in Venice.

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