Snap posts big 1Q loss, higher revenue, misses expectations

He continued that he's not surprised to see other companies following Snapchat with a camera-first strategy.

J.P. Morgan expected Snap's first-quarter DAUs to grow to 169 million, while Monness, Crespi, Hardt & Co Inc pegged it at 173 million. Its revenue was below Wall Street's expectations in its first quarterly earnings since its initial public offering of stock. Snapchat had 166 million active daily users at the end of the quarter, up 36% from last year's first quarter, but well below the 400 million that Instagram has. It was the most valuable USA tech IPO since Facebook first floated its stock in 2012. Vollero said in Wednesday's call that $1.3 billion in restricted-stock-unit expenses remain, and more than half will be recognized through the remainder of 2017.

On that $149.6 million in revenue, Snap reported a net loss of more than $2.2 billion.

Snap reported US$150 million in total revenue in the quarter, up 286% from US$39 million a year ago.

Snap IPOed in March, which raised $3.4 billion and propelled the company to a $24 billion valuation. The tech giant's moves could be blocking future growth for Snapchat.

Snapchat, which allows users to send photo and video messages to one another that disappear after a few seconds, is wildly popular among teenagers and young adults. "That's going to continue".

About the $2 billion: Much of that came from the "CEO award" that Snap's investors gave Evan Spiegel as a reward for taking the company public.

Snapchat, on the other hand, tried to go the feature-rich way by offering "stories", "discover" and other non-messaging features that don't necessarily appeal to the demographic that it now rules over - millennials.

Snapchat, however, has already been more than eclipsed by Instagram Stories.

Average revenue per user is up 181% this quarter compared to last year's numbers this same time of the year. This concept was popularized by Snapchat. The company's chief strategist, Imran Khan, said on the conference call, "We made good progress this quarter improving the performance and quality of our Snapchat application, especially on Android, which has helped result in increased net user adds and engagement".

"Right now they clearly have a loyal user base in the younger population, but the over 30 year old demographic is one of the most attractive segments for advertisers due to their spending power", Eric Kim, managing partner at venture capital firm Goodwater Capital, wrote in a report. It is essentially a one-to-one messaging app that's fun and easy to use.

But investors have anxious that Snapchat's growth will stall as Facebook relentlessly targets the service's audience.

"Whatever the new thing is, they should acquire that", he said.


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