Snap released its first results since going public, which show the company is struggling to add new users as it deals with a significantly widening net loss.
The Snapchat app maker’s revenue went up from $38.8 million in Q1 2016 to $150 million in the recent quarter, while its losses also increased: from $104.6 million to $2.2 billion.
Some $2 billion of Q1 2017 loss was due to stock-option grants given to employees, including a $750 million bonus in the form of a 3 per cent stake given to CEO and co-founder Evan Spiegel for taking the firm public.
When asked about the losses during an earnings call, CFO Drew Vollero said Snap is “still in investment mode”, and “managing this company for the long term.”
Daily active users grew from 122 million in Q1 2016 to 166 million in Q1 2017.
Spiegel said Snap is happy with its early results and performance, noting an increase in Android device users were among several improvements made: “During the first quarter, we focused our efforts primarily on the performance and quality of our Snapchat application and automation across our content products and advertising business.”
He revealed over 3 billion Snaps created are every day, generating an increase in overall sessions and time spent.
Chief strategy officer Imran Khan said users spent over 30 minutes per day on Snapchat during Q1: “largely because of the unique content on our platform.”
It doesn’t help Snap’s cause rival Facebook’s businesses are cloning Snapchat features, with users of Instagram’s Stories feature exceeding Snapchat’s entire user base.
When questioned about this, Speigel said: “If you want to be a creative company, you have got to be comfortable with and enjoy the fact that people copy your products if you make great stuff… Just because Yahoo has a search box doesn’t mean they’re Google”.
Just before revealing its results, Snap announced new features for its app, including the Magic Eraser, an ‘infinity’ setting on its timer “allowing the recipient to enjoy your Snap as long as they’d like”, plus a loop tool for videos on loop, similar to Instagram’s Boomerang.
An App Annie report last week said marketing personnel should develop specific campaigns for Snapchat, which stands out from rival messaging services in terms of usage.