More Revenue, Fewer Users For Snapchat
After the market closed on Tuesday Snap, Inc. held its Q2 Earnings call. There was one really bright spot for them – top-line revenue jumped 44% YoY to $262M. This growth was powered by the migration to a fully automated ad buying API. However, all wasn’t puppies and rainbows for Snap in Q2. They’re DAUs declined slightly in Q2 to 188M compared to 191M in Q1. While this is only a 3M drop it’s the first time they’ve ever recorded a quarter-over-quarter decrease in users.
Although The Street applauded Snap’s revenue growth and newfound fiscal responsibility, it doesn’t feel like the social pub is completely out of the woods. User attrition is being caused by their widely disliked app redesign, and Instagram’s surging popularity. Neither of these problems appear to be fixable in the near term, which is why Snap lowered its user forecast for the remainder of 2018. During the call Snap’s CEO Evan Spiegel talked about their improved retention rate, especially for the 35+ demo. Keeping users on the platform is equally as important as finding new ones, so I’ll give them a “glass half full” point for that one. Still feels like they have a ways to go though.