- Adjusted EPS: Loss of 16 cents per share vs. loss of 14 cents per share expected by a Thomson Reuters consensus estimate
- Revenue: $181.7 million vs. $186.2 million expected by a Thomson Reuters consensus estimate
- Daily active users (DAUs): 173 million vs. 175.2 million expected by a StreetAccount estimate
- Average revenue per user (ARPU): $1.05 vs $1.07 expected by FactSet
Snap’s second-ever quarterly report as a public company came at a crucial time for the ephemeral messaging app.
Snap makes money from advertising, like short video clips and sponsored augmented reality filters. Digital advertising has become a challenging area to monetize, dominated by Facebook and Google — so a growing pool of users means there’s a growing number of eyeballs that will see ads and return money to investors.
But as a public company, Snap has failed to deliver the rapid user growth that’s become the hallmark of Silicon Valley companies. Snap’s ability to monetize users has also flattened: The company posted average revenue per user of $1.05 worldwide, the same level as the fourth quarter (which, to be fair, is a busy time for advertisers during the holiday shopping season.)
The company went public in March amid a dearth of IPOs, and was well-received at first: Shares jumped 44 percent on the first trading day. But Wall Street analysts, including IPO underwriter Morgan Stanley, have gradually lowered the expectations. Shares have been under pressure, falling about 41 percent over the past three months.
As Snap has struggled to buoy a falling share price over the quarter, competitors have caught up. Multiple agencies have told CNBC that interest in Snapchat among advertisers is flat to declining as many influencers and creative agencies look to Facebook’s Instagram. Google is also in talks to create a quick-loading media platform similar to Snapchat’s Discover, according to The Wall Street Journal. And with most of its user base on iOS (at least as of earlier this year), Snap is also beholden to Apple, which has its own augmented reality ambitions.
Still, while Snap may be small, it boasts high engagement among the coveted millennial age group. Martin Sorrell, head of advertising giant WPP, told CNBC this month that his company plans to double its spending on Snap this year.
— CNBC’s Michelle Castillo contributed to this report.
Disclosure: CNBC parent NBCUniversal is an investor in Snap.