Snap Inc. has published its 2017 Q2 report, reporting $182 million in revenue and continuing its downward financial spiral.
The company behind the photo-sharing app Snapchat saw its stock rise to $13.77 after markets closed (08/11/17 UPDATE: now around $12.00 a share), but the overall price has fallen dramatically since the company’s 2017 Q1 announcement, its first earnings announcement since Snap’s IPO.
When Snap Inc. had its public debut, share prices came in at $17, so the current price is still quite a fall from its initial listing. Shares hit a record low of $11.91 on August 3. This large decline of Snap stock is partly due to the expiry of its IPO lockup period, as now early investors and employees can sell shares.
Snap has added 7.3 million daily active users (DAU) in their Q2 this year, totaling 173 million total users. Looking back, the growth of DAU from Q4 2016 to Q1 2017 was eight million, showing a 25 per cent drop in added users compared to this year’s first quarter. Estimates for total 2017 user growth in general hover around 26 million.
For this quarter, the average revenue per user (ARPU) came in at $1.05, an increase over Q1’s $0.90. This is one of the more important metrics Snap uses, as it is a good indicator of how well a company can monetize its user base.
Still, these results may limit Snap’s eventual growth to profitability, as reports have indicated that the company won’t deliver non-GAAP profits until 2020.
Last quarter Snap reported that users spend around 30 minutes on the app, compared to the 25-30 minute estimations during the IPO period. Over 25 per cent of smartphone users in the US, UK, and France now use Snapchat every day, according to CEO Evan Spiegel. Snap is making a big push towards helping advertisers use the platform, with self-serve and programmatic advertising, meaning a larger base of digital marketers can more effectively manage and create campaigns.
Snap’s declining growth numbers can also be attributed to its non-ability to remain competitive with larger social media networks. Facebook and Instagram have both introduced stories, with the latter having already passed the popularity of Snap’s own version of daily user updates. Let’s also not forget the report that Snap CEO Evan Spiegel declined a $30 billion buyout from Google.