Snapchat loses 2M more users and shares sink despite business growth

[ad_1]

Snapchat continued to shrink in Q3 2018 but its business is steadily improving. Snapchat’s daily active user count dropped again, this time by 1 percent to 186 million, down from 188M and a negative 1.5 percent growth rate in Q2. User count is still up 5 percent year-over-year, though. Snapchat earned $298 million in revenue with an EPS loss of $0.12, beating Wall Street’s expectations of $283 million in revenue and EPS loss of $0.14, plus a loss of a half a million users.



Snap entered earnings with a $6.99 share price, close to its $6.46 all-time low and way down from its $24 IPO opening price. Snap lost $325 million this quarter compared to $353 million in Q2, so it’s making some progress with its cost cutting. That briefly emboldened Wall Street, which pushed the share price up 8.3 percent to around $7.57 right after earnings were announced.


But then Snap’s share price came crashing down to -6.8 percent to $6.51. The stock had been so heavily shorted by investors that it only needed modest growth in its business for shares to perk up, but the fear that Snap might shrink into nothing has investors weary. Projections that Snap will lose users again next quarter further scared off investors.


Worringly, Snapchat’s average revenue per user dropped 12.5 percent in the developing world this quarter. But strong gains in the US and Europe markets grew global ARPU by 14 percent. Snap projects $355 million to $380 million in holiday Q4 revenue, in line with analyst estimates.



In his prepared remarks, CEO Evan Spiegel admitted that “While we have incredible reach among our core demographic of 13- to 34-year-olds in the US and Europe, there are billions of people worldwide who do not yet use Snapchat.” He explained that the 2 million user loss was mostly on Android where Snapchat doesn’t run as well as on iOS. Noticibly absent was an update on monthly active users in the US and Canada. Snap said that was 100 million monthly users last quarter, probably in an effort to distract from the daily user shrinkage. Not updating that stat again this time may mean it shrank too.


Spiegel had said in a memo that his stretch goal was break-even this year and full-year profitability in 2019. But CFO Tim Stone said that “Looking forward to 2019, our internal stretch output goal will be an acceleration of revenue growth and full year free cash flow and profitability. Bear in mind that an internal stretch goal is not a forecast, and it’s not guidance.”


Now down to $1.4 billion in cash and securities, Snap will need to start reaching more of those international users or improving monetization of those it still has to keep afloat without outside capital.


An Uphill Battle


Q3 saw Snapchat’s launch its first in-house augmented reality Snappable games, while plans for an third-party gaming platform leak.  The Snappable Tic-Tac-Toe game saw 80 million unique users, suggesting gaming could be the right direction for Snap to move towards.


It launched Lens Explorer to draw more attention to developer and creator-built augmented reality experiences, plus its Storyteller program to connect social media stars to brands to earn sponsorship money. It also shut down its Venmo-like Snapcash feature. But the biggest news came from its Q2 earnings report where it announced it’d lost 3 million users. That scored it a short-lived stock price pop, but competition and user shrinkage has pushed Snap’s shares to new lows.



Snapchat is depending on the Project Mushroom engineering overhaul of its Android app to speed up performance, and thereby accelerate user growth and retention. Snap neglected the developing world’s Android market for years as it focused on iPhone-toting US teens. Given Snapchat is all about quick videos, slow load times made it nearly unusable, especially in markets with slower network connections and older phones.


Looking at the competitive landscape, WhatsApp’s Snapchat Stories clone Status has grown to 450 million daily users while Instagram Stories has reached 400 million dailies — much of that coming in the developing world, thereby blocking Snap’s growth abroad as I predicted when Insta Stories launched.. Snap Map hasn’t become ubiquitous, Snap’s Original Shows still aren’t premium enough to drag in tons of new users, Discover is a clickbait-overloaded mess, and Instagram has already copied the best parts of its ephemeral messaging. Snap could be vulnerable in the developing world if WhatsApp similarly copies its disappearing chats.


At this rate, Snap will run out of money before it’s projected to become profitable in 2020 or 2021. That means the company will likely need to sell new shares in exchange for outside investment or get acquired to survive.



[ad_2]

Source:

https://techcrunch.com/2018/10/25/snapchat-q3-2018-earnings/

Comments

Post a Comment

Popular posts from this blog

Palm’s tiny secondary smartphone arrives November 2

Image
[ad_1] Can’t wait to get your giant hand on Palm’s tiny “ultra-mobile?” Turns out it will be arriving sooner than later — next Friday, in fact. Verizon (you know, the giant telecom that owns the media conglomerate that owns TechCrunch) announced today that it will be launching the strange new thing on November 2. The 3.3-inch device runs $349 off-contract. On-contract, it’s $14.58 a month for two years. It wll be available through the carrier’s stores o through Best Buy kiosks. The companies are also betting big on accessories, from companies including Kate Spade, Zagg, LifeActiv and some Verizon-branded products. Makes sense, as the device is being positioned as somewhere between a smartphone and smartwatch, given its small size. It’s novel, for sure, the notion of what’s essentially a smaller, second phone. It’s also fairly retro, both from the standpoint of the startup licensing out the familiar name and the fact that it sports roughly the same size screen as the origin
Read more

The Biggening

Image
The Biggening - Everything is already big. The iPhone SE died. The iPad Mini was last upgraded in 2015. The 11-inch MacBook Air died years ago. The smaller Series 4 Apple Watch has a bigger display than the larger Series 3 Apple Watch. Apple’s smallest devices are slowly getting bigger and the company’s events don’t suggest those ambitions are going to stop. While the release of the truly monstrous 6.5” iPhone XS Max last month embodies this trend in the most readily apparent way, the way Apple has emphasized external displays on its new iPad Pro and its MacBook Pro line are perhaps more telling of the company’s future ambitions, a world where displays are boundless. If you’re thinking that Apple can only make displays so much bigger while reducing the sizes of the device, there’s a lot further they can take this.  Apple’s wants bigger displays. The old iPad Pro was perhaps too big; its massive form factor was great for creative tasks but it was one of the most niche
Read more

Facebook confirms it’s building augmented reality glasses

Image
[ad_1] “Yeah! Well of course we’re working on it” Facebook’s head of augmented reality Ficus Kirkpatrick told me when I asked him if Facebook was building an AR glasses at TechCrunch’s AR/VR event in LA. “We are building hardware products. We’re going forward on this . . . We want to see those glasses come into reality, and I think we want to play our part in helping to bring them there.” This is the clearest confirmation we’ve received yet from Facebook about its plans for AR glasses. The product could be Facebook’s opportunity to own a mainstream computing device on which its software could run after a decade of being beholden to smartphones built, controlled, and taxed by Apple and Google. Fresh off the heels of its first hardware launch, Facebook's Fiscus Kirkpatrick says the company is also working on an AR headset https://t.co/AS8IMIO56b #TCARVR pic.twitter.com/eWW6JX22yc — TechCrunch (@TechCrunch) October 24, 2018 This month Facebook launched its first self-bra
Read more