Friday, 20 October, 2017

Snapchat's First Earnings Report Reports Few Earnings for Snapchat

Jo Caldwell | 19 May, 2017, 23:20

Snap disappointed analysts with reported revenue of $149.6m in the three months ending in March. Its user numbers also came in light.

J.P. Morgan expected Snap's DAUs to grow to 169 million in the first quarter, while Monness, Crespi, Hardt & Co Inc pegged DAUs at 173 million. Wednesday afternoon, the company lost $6 billion in market value overnight as the stock plunged more than 20 percent.

Asked during the earnings call if Facebook scares him, Snap's CEO Evan Spiegel laughed.

"You have to get comfortable with and enjoy the fact that someone is going to copy you if you make great stuff".

Snap's stock is not taking this less-than-stellar earnings report lightly. At the time of its IPO filing, the company did disclose its RSU status in its prospectus.

A large reason for the underachievement is due to the number of users slowing down. In the "Rest of World" region, it added just one million users to reach 40 million DAUs.

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During its first quarter ending on March 31, Snap had 166 million daily active users, less than Wall Street estimates. That might help them expand their user base.

However, revenue for Facebook during its first quarter following its IPO in 2012 was $1.18 billion. Last month, Instagram stories surpassed Snapchat stories with 200 million users.

All the copying appears to be paying off for Facebook.

The figures show Snap and Snapchat continue to grow in all aspects, but that increase has slowed down on a quarterly basis, particularly after Facebook introduced Instagram Stories as a jab to its rival a year ago. "But I do think at this point, we're pretty much ahead in terms of the technology that we're building". Then he took a dig: "Just because Yahoo has a search box doesn't mean they're Google". The company had aimed to accrue a further two million new users.

To compensate for the lacklustre user growth, Snap pointed out that more than 3 billion daily snaps were created in order to underscore how actively engaged its user base is.

Snapchat's first earnings report didn't meet industry expectation.

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