Spiegel finished his comments by summing up Snap's work during Q1 in three words: "performance, quality, and automation." Snap chief strategy officer Imran Khan, who leads the ad business, revealed that users spend over 30 minutes per day in the app on ...
Snap CEO Evan Spiegel.Getty/Michael Kovac
Snapchat's user growth slowed to its lowest pace in years, as parent company Snap Inc. missed Wall Street expectations for its first quarterly earnings as a public company on Wednesday, sending its shares plunging more than 20% in after-hours trading.
Snap added 8 million new daily users in the first three months of the year, representing year-on-year growth of 36%. At this time last year, Snapchat was growing its DAUs by 52%.
Snapchat's weak user growth comes as Facebook has intensified its mimicking of the Snapchat Stories format across its suite of apps. Instagram Stories recently outpaced Snapchat by reaching 200 million daily users.
Snap said that its hefty net loss of $2 billion during the quarter was attributed to stock-based compensation related to its February initial public offering.
Here are the key numbers from Snap's Q1 earnings:
EPS (adjusted): Net loss of $0.20 vs. $0.16.
Revenue: $149.6 million vs. $159 million expected, up 286% from $39 million in the year-ago period.
Daily active users: 166 million, an increase of 36% from 122 million in the year-ago period.
Net loss: $2.2 billion.
Earnings call live blog:
CEO Evan Spiegel kicked off Snap's first earnings call with investors by saying that the past quarter has been focused on "working on the quality of the Snapchat application," specifically on Android. Snap noted in February that Android bugs had contributed to its slowed user growth in Q4.
30% of new Snapchat users during the quarter were on Android, up from 20% in the previous quarter.
Spiegel called Snapchat's recently announced search feature "exciting" because it surfaces the “so-called long-tail of content on our service." Snapchat users can search for crowd-sourced stories based on a range of topics, from tourist attractions to concerts.
3 billion messages, or "snaps," are sent on Snapchat every day, up from 2.5 billion in the previous quarter.
Spiegel finished his comments by summing up Snap's work during Q1 in three words: "performance, quality, and automation."
Snap chief strategy officer Imran Khan, who leads the ad business, revealed that users spend over 30 minutes per day in the app on average.
He touted that 21 million people watched Snapchat's Oscars story, which received 250,00 submissions from Snapchat users. “The power of these stories is resonating with our community," he said.
Khan highlighted the company's recent ad tech rollouts, including the recent emphasis placed on programmatic advertising and its upcoming self-service tool for small businesses.
He called the company's "Snap to Store" ad offering, which ties campaigns back to foot traffic in physical stores, the “holy grail of ad measurement.” A Hollister campaign found that 63,000 Snapchat users visited its stores after viewing related ads in the app.
The $8.3 million in non-advertising revenue Snap generated was primarily driven by its Spectacles eyewear, according to CFO Drew Vollero. But only 5 million snaps have been created through Spectacles to date vs. the 3 billion that are sent over Snapchat as a whole every day.
Snap has 2,360 employees, up from 1,859 at end of 2016.
The company spent $18 million on expanding its offices (which now number 11) around the world during the quarter.
When asked about Snapchat's slowed user growth, Spiegel gave some insight into why he doesn't believe in "growth hacking" like other social apps. Rather than send push notifications or emails to make them open the app regularly, he said Snap views growth “through the lens of creation" and "removing friction from the creative process.” So if it can make Snapchat easier to use, people will use it more.
Spiegel also said that poor internet access in less-developed parts of the world is "a real issue" for Snapchat's growth. Snap recently got itself into hot water in India over an alleged comment Spiegel made about not caring about "poor countries."
Snap's approach to hardware like Spectacles is to “usually work on it ourselves" before seeking outside help, Spiegel said. He didn't give much more color beyond that hardware is an “interesting avenue to explore." (We know that Snap has looked at making camera drones.)
Over 8 million people have tuned into Snapchat's original shows so far, Spiegel said. He said that while a lot of video content on mobile is repurposed from TV (cough: Facebook), Snap works closely with partners like A&E to create scripted shows specific to the app.
Spiegel won't budge on specific new features or products that are coming down the road. “At this point, we’re pretty famous for not giving guidance on our product pipeline." Indeed.
Ah yes, the elephant in the room: Facebook. Spiegel laughed out loud when asked if he was worried about Facebook copying his features. “Just because Yahoo has a search box doesn’t mean they’re Google." Burn!
Here are some charts from Snap's Q1 earnings:
Get the latest Snap stock price here.
SEE ALSO: With Snap's first earnings report coming, Facebook and Twitter provide a cautionary tale
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