Snap Inc. is best known for its popular social media platform- Snapchat. When introduced, Snapchat took the social media by storm, but it seems like the days of Snapchat will cease to exist in the upcoming months. Snapchat earnings for the Q1 and the number of Snapchat users, both are alarming signs that the social media platform needs to buck up.
For the first quarter of 2017, Snapchat earnings reported are $149.65 million in revenue. Compared to this, the earning for the same quarter during last year were only $38.8 million. Also, the company saw a growth in Snapchat users at 166 million for Q1. During the Q1 of 2016, the daily active Snapchat users were 122 million. Even though this is a year-over-year increase at 36 percent, it is only just a little better than how it performed in the end of 2016.
Snapchat Earnings not up to Analysts' Expectations
Snapchat users reached 166 million but yet, the investors are dismayed. Not only with the slump in its growth rate for number of users but also for its revenue. Expectations from analysts for Snapchat earnings were around $158 million. Snapchat does not provide information about its active users on a monthly basis. But when its IPO was announced in March, it had said that daily active Snapchat users during December were 161 million, on an average.
Out of the approximate $150 million revenue of Snapchat, only around $8 million came from Snap Inc.’s Spectacles, reports CNBC. CEO of Snap Inc., Evan Spiegel says that till date more than 5 million snaps are created with Snap spectacles. Also, according to Snap’s earning presentation, the company has seen 3 billion plus snaps taken every day during the first quarter (Q1).
Compared to the $38.8 million revenue during the Q1 of 2016, this $149.65 million revenue is a significant 286 percent surge. Nevertheless, Snap Inc’s performance for the Q1 of 2017 has majorly disappointed many investors and analysts.
Facebook Competition a Major Threat for Snap Inc
We recently reported that facebook is very close to hitting the 2 billion mark for its daily active facebook users. It reported a tremendous number of 1.28 billion users for 2017’s first quarter. Facebook is a social media behemoth compared to Snapchat and its numbers prove the same.
Recently, facebook also mentioned that its widely popular messaging app- Watsapp has 175 million daily active users for its newly introduced stories-like Status feature. When Facebook tried to rip off the Snapchat stories feature during August 2016, with Instagram stories; it worked in the favor of Facebook.
Snapchat Way Behind the Number of Instagram Stories User Numbers
Facebook also announced that users for Instagram stories have reached the 200 million mark. Snapchat with 166 million users approximately is almost 34 million users behind. This the biggest reason of worry for Snap, as Instagram is getting even bigger into the second quarter (Q2) of this year, with around a whopping 700 million monthly users.
Also, Snapchat generated revenue of $0.90 from each user in the first quarter of 2017. Well, this is up from $0.32 during Q1 of 2016. However, it is low compared to the $1.05 revenue from each user in the fourth quarter (Q4) of 2016. Snap is in its early monetization phase, and investors and analysts were expecting a continued growth. Which, Snapchat earnings showed that the company has failed to do.
Snap Shares also Affected
After the Snapchat earnings report was out, the company saw a decline in its shares by almost 24-25 percent. Shares are now trading approximately around $18.19. TechCrunch says that this is the lowest since the time Snapchat went public.
Facebook has introduced various clones of Snapchat stories and seems like it is taking a toll on both, Snapchat earnings and Snapchat users. The first quarter earnings, growth slump, and break-neck competition, all these things are like warning bells for Snap Inc. Well, it should also think of some really useful strategies for gaining a boost in users and Snapchat earnings.