Snap Shares Plummet On Second Quarter Revenue, Earnings Miss

Snap Shares Plummet On Second Quarter Revenue, Earnings Miss

Shares plunged as much as 16% in after-hours trading on Thursday after the company missed expectations for revenue, earnings and user growth in its second quarter as a public company. Revenue in the second quarter, ending June 30, rose 153% to $181.7 million, from $71. Daily active users increased just 4% from the first quarter to the second quarter. While quarter-to-quarter user growth missed Street estimates (10 million daily users), Spiegel said on a conference call with investors that Snapchat saw its highest ever time spent and engagement metrics on an aggregate and per user basis during the quarter, and the average daily user sends more than 20 "snaps" per day. Spiegel said new features like "customer Stories" and "Snap map" are intended to promote sharing between users, which trickles down into more advertising revenue and creates a "virtuous cycle." Spiegel added that the company will continue building out more augmented reality features, highlighting the company's hot dog filter, which has been viewed 1.5 billion times in snaps, as a successful example. “We’ve been able to grow in saturated markets because we’re so focused on innovation,” he added. Snap has been focused on product innovation and building outs its growing mobile ad business, which touts the app's young users base, the majority of which is made up of teens and millennials. In April, the company announced a set of new augmented reality (AR) feature. Like Snap, Facebook is also pushing aggressively into video and augmented reality.

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Snap reported its second quarterly earnings on Thursday, which missed earnings and user growth estimates.

rough ride on the public market just got rougher. Shares plunged as much as 16% in after-hours trading on Thursday after the company missed expectations for revenue, earnings and user growth in its second quarter as a public company.

Revenue in the second quarter, ending June 30, rose 153% to $181.7 million, from $71. 8 million in the same period a year earlier, below the $186.8 million expected on average among analysts polled by Yahoo Finance. (The full results are available here.) Snap generates nearly all of its revenue through mobile ads, which it displays in its “Stories” format. Snapchat also sells advertisers sponsored user tools, filters and lenses, competing with Facebook FB -2.24%

and Google GOOGL -1.78% for marketers’ digital advertising dollars, as well as for a growing slice of companies’ television advertising budgets.

The company posted a net loss of $443 million, or 16 cents a share, larger than the 14 cents per share loss forecast by analysts. Expenses in the quarter totaled $2.2 billion, attributed mostly to a $2 billion stock-based compensation cost. Snap reported average revenue per user of $1.05 in the second quarter, with most growth coming from North America. RBC Capital Markets analyst Mark Mahaney had estimated average revenue per user of $1.19 for the quarter.

A major source of concern among investors is Snapchat’s slowing (and slower-than-expected) user growth. Snapchat’s daily users grew 21% year-over-year to 173 million, from 143 million users the same period a year earlier. Daily active users increased just 4% from the first quarter to the second quarter.

While quarter-to-quarter user growth missed Street estimates (10 million daily users), Spiegel said on a conference call with investors that Snapchat saw its highest ever time spent and engagement metrics on an aggregate and per…

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