Snapchat’s Q1 Earnings Call Ouchy
To put it mildly this has been an adventurous Q1 for Snapchat. In case you haven’t been keeping score here’s what you’ve missed in just the last 90 days. First super-influencer Kylie Jenner tweeted that she hadn’t used Snapchat since the birth of her baby, then Snapchat advertiser Maybelline asked its followers on Twitter if they still used Snapchat since their views on the platform had dropped dramatically, and then they laid off 100+ employees in a cost-cutting move.
But as it turns out these headaches weren’t the problem for Snapchat in Q1 . . . their universally loathed redesign was the real killer. In late January Snapchat pushed out a change of their user interface in an attempt to “make Snapchat more palatable to a wider audience”. User reaction wasn’t good. By mid-February a Change.org petition had racked up 1.2M signatures asking Snapchat to go back to the old design, which they have so far resisted to do.
It looks like the redesign problem took its toll on Snapchat’s Q1 earnings. Although revenue and user growth were up significantly over Q1’17, the QoQ picture wasn’t as bright. Compared to Q4 revenue was down 19% (which was partly blamed on seasonality), and MAUs were only up 2%. That means Snap’s audience has effectively stopped growing over the last 90 days, which coincidently times with the redesign. As you’d expect Wall Street’s reaction to the news wasn’t good either – yesterday Snapchat’s stock was down 15% in after hours trading. Talk about a self-inflicted wound!