Snap posted a 153 per cent year-on-year increase in revenue in Q2 2017, its second set of results since it launched its IPO, but suffered from sluggish user growth and posted a net loss of $443 million.
The Q2 net loss was significantly higher than the $116 million loss the company reported in Q2 2016. Revenue in Q2 2017 was $181.7 million and daily active users (DAU) grew from 143 million in Q2 2016 to 173 million, an increase of 21 per cent year-over-year.
DAUs in the recent quarter increased 7.3 million or 4 per cent quarter-over-quarter, from 166 million in Q1 2017. This was slower than the 5 per cent sequential growth in Q1.
The user growth was primarily driven by consumers in the US and Canada, with over 40 per cent of net additions in Q2 coming from these countries.
CEO Evan Spiegel was positive on an earnings call, when he said Snapchatters visit more frequently, spend more time, and create more Snaps than ever before.
“We reached an important milestone in our core markets with over 25 per cent of smartphone users in the US, UK and France now using Snapchat every day,” he said, adding monetisation: “is also progressing nicely although we are still in very early stages as we continue to build out our self-service and programmatic infrastructure.”
He hailed Snapchat’s World Lenses feature and said: “Our dancing hot dog is most likely the world’s first augmented reality super star, viewed over 1.5 billion times in Snaps created by our community.”
Spiegel also talked up the original content created for the app, and said a show called Phone Swap is getting picked up for TV, adding the company is working to stabilise the backend infrastructure of the Android version of Snapchat.
It was also reported Snap is alienating its advertisers, but CFO Imran Khan said the company is focused on improving its ad offerings for brands and advertisers, developing efficient tools for them “and proving the effectiveness of our advertising.” Advertising revenue increased 146 per cent year-on-year.
On the plus side Snap boosted its ARPU in the rest of world category, from $0.19 in Q1 to $0.29 in Q2, which TechCrunch said shows “it’s learning to monetise lower-bandwidth users.
The publication also said: “Snap’s cool factor is wearing off. It needs new ways to entertain teens and score ad dollars”, and recommended the company launch an augmented reality developer platform, hire social media influencers and creators and, crucially, figure out a way to fight competition from Facebook.
Meanwhile, to placate investors, Spiegel said neither he nor co-founder Bobby Murphy will sell their shares this year.
Stock prices took a hit when, on 31 July, early investors and employees were allowed to sell their holdings for the first time since the IPO.