Snapchat face-planted in its Q1 2018 earnings report amidst a rocky redesign and sustained competition from Facebook, unable to keep up its comeback from last quarter. Snapchat reached only 191 million daily active users, up from 187 million, with its growth rate sinking to 2.13 percent — its slowest ever, compared to 5.05 percent in Q4 and a disastrous 2.9 percent in Q3. It pulled in $230.7 million in revenue with an adjusted EPS loss of $0.17. That’s compared to Wall Street’s estimates of $244.5 million in revenue and an adjusted EPS loss of $0.16.
It seems that Snapchat’s sudden growth spurt last quarter was a fluke, with Snap adding just 1 million users in its core North American market this quarter. It’s appears it’s going to have ongoing trouble significantly increasing its user count with over 300 million daily users on Instagram Stories, and 450 million on WhatsApp Status — both clones of Snapchat. Wall Street hates weak user growth, and Snap’s share price fell about 16 percent in after-hours trading to under $12.
Snap’s losses grew to $385.7 million, up from $350 million last quarter. That’s another spot Snap was hoping to improve with cost-cutting layoffs, but those were too little too late.
Snapchat spent the year’s first quarter trying to capitalize on Facebook’s Cambridge Analytica scandal while overhauling the design of its own app. Initial app store reviews were predominantly negative, but first-time installs and its App Store rank increased. Celebrity backlash and anecdotal declines in usage for some people have pushed Snap to waffle on the changes, in some cases changing the app to work more like the old version.
Snap just launched version 2 of its Spectacles camera sunglasses, but we’ll have to wait until next quarter to see any revenue from that. The question will be whether Snapchat’s layoffs of over 120 staffers will start to make a dent in its big losses.