Snapchat is losing twice as much money as it did last year

Snapchat Profit LossSnap reported its earnings for the first time since becoming a public company in March of this year. Its daily active user count clicked up to 166 million, a 5 percent increase over last quarter, up 36 percent from this time a year ago. That puts it behind Instagram Stories, a competitor launched by Facebook that copied heavily from Snapchat and has already passed 200 million users. It also means Snap hasn’t found a way back to the rapid growth it saw in years past.


Investors were not pleased with the slowing rate of growth, and the company’s shares were down nearly 25 percent in after-hours trading. Financially the company continued to increase its revenue, which grew nearly 300 percent to just under $150 million in the first quarter. Of that around $8 million came from sales of Spectacles, its one hardware product. But it’s still a long way from achieving a profit, and even then that revenue figure came in under Wall Street expectations of $158 million.


The company’s losses ballooned to over $2.2 billion, but most of those were one time expenses related to stock bonuses paid out after a successful IPO. CEO Evan Spiegel got a sweet $750 million on his own. But even if you ignore that massive hit, Snap’s losses basically doubled. It burned through $104 million in cash in the first quarter of 2016, and lost $208 million during the first three months of 2017. This was despite the fact that the average revenue per user generated by Snap was 90 cents, up 14 percent from last quarter and up 181 percent from the same period last year.


Investors should have seen this coming. The company’s financial disclosures before its IPO revealed large and growing losses. Snap warned investors that it was unsure when, if ever, it would reach profitability. And while its user base was highly engaged, its user growth slowed to its lowest level ever in the fourth quarter of last year.

[Read More from The Verge]

Posted May 10, 2017 by & filed under Mobile Development, News.