Tech: LIVE: Snap misses across the board for Q2 earnings, stock gets whacked (SNAP)
Snapchat maker Snap Inc. missed expectations for its second quarter as a public company, sending its stock diving more than 10% on Thursday.
Snapchat maker Snap Inc. missed Wall Street’s expectations for its second quarter as a public company, sending its stock diving more than 10% in after-hours trading.
Snap managed to only attract 7 million new daily users during the quarter, while analysts expected an additional 10 million. Snap also fell short of expectations for revenue. And the company's net loss ballooned to $443 million, compared to $116 million at the same time last year.
One bright spot: The company did manage to grow its average revenue per user to $1.05 from $0.50 in the year-ago period, a healthy increase of 109%. Snap executives have argued that they can meaningfully grow the business by making more money off existing users, rather than rely on exponential user growth like Facebook.
81% of Snap's second-quarter revenue came from North America, a strong indicator that the app is focused on monetizing users in the world's largest and most valuable ad market.
Here are the key numbers from Snap's Q2 earnings:
- Revenue: $181.7 million vs. $189 million expected.
- Earnings per share (adjusted): Net loss of $0.16 vs. $0.15 expected
- Daily active users: 173 million, down from 175 million expected.
Snap's stock has fallen off a cliff since its hotly anticipated initial public offering earlier this year. Investors are worried the app maker won't be able to grow its ad business in the face of mounting competition from Facebook.
Also weighing on the stock: Employees will also be able to sell their shares on the public market for the first time next week, presenting an ultimate test of confidence in the company.
Earnings call live blog:
CEO Evan Spiegel kicked off this quarter’s earnings call with analysts. He highlighted 4 million additional new users in North America, the world’s largest ad market. He also said that 25% of people in the US, UK and France with smartphones use Snapchat every day.
Every Snapchat daily user creates more than 20 messages, or “snaps,” per day, according to Spiegel. That’s high engagement.
Spiegel praised Snapchat’s famous dancing hot dog, calling it the "world’s first augmented reality superstar.” He said that the hot dog, which has generated quite a few memes, has been viewed 1.5 billion times in the app.
Stories created by Snapchat's Discover partners saw a 30% bump in viewership this quarter, per Spiegel. He also touted the success of the company's early shows effort, with one called "Phone Swap" getting picked up for TV and another winning an Emmy award.
Spiegel touted Snapchat’s Memories feature, which acts like a camera roll for saving photos and videos that would otherwise expire. 250 million snaps are saved to Memories every day, and Spiegel said he sees the feature becoming a “more important part of Snapchat experience in the future.”
Spiegel and his cofounder, Bobby Murphy, will not sell shares this year. Investors have been worried about the volatility of the stock leading into the company’s lock-up expiration that will allow employees to sell shares on Monday. “We believe deeply in the long term success of Snap,” said Spiegel.
Chief Strategy Officer Imran Khan said that 60% of Snap ads are now delivered programmatically, a more than double increase from last quarter. Snap’s ad business has been off to a slow start, but this uptick in the automated selling of inventory is a good sign that faster growth will continue.
- Snap's camera glasses, Spectacles, saw a decrease in sales during the second quarter, per CFO Drew Vollero. The company's "other" revenue was only $5.4 million, down from $8.3 million from the previous quarter.
Snap spent “slightly more” than 200 million in cash on acquisitions during the quarter, but it won’t say exactly how that money was spent. Its confirmed acquisition of the ad company Placed will be reflected in its third-quarter financials, as that deal was closed in July.
Spiegel wouldn’t give any kind of visibility into how Snapchat’s recent maps feature has affected app engagement, but he hinted that it can be “used for discovery, and not just for directions.” That seems to suggest that there will be advertising opportunities eventually.
This story is developing. Check back for updates.