Snap Misses Revenue & User Growth Estimates In Q2 2017

Snapchat maker Snap Inc. on Thursday posted its consolidated financial results for the second quarter of the year, revealing that it missed street estimates from analysts in terms of revenue and user growth, one of its most important metrics. The company's operating revenue over the three-month period ending June 30 amounted to $182 million, a 153 percent year-on-year increase, yet some consolidated estimates had this figure at $186 million. Likewise, the Venice, Los Angeles-based social media giant said its average daily active users grew by 21 percentage points compared to Q2 2016 as Snapchat currently has approximately 173 million users on a daily basis, but Factset's poll projected two million more.

Snap's latest report built on the initial disappointment that the company generated after posting its first financials as a public company earlier this year and caused its shares to plunge down to $12.20 as of this writing, less than half of their IPO price from early March. While the figures Snap reported aren't a sure indication that the firm is losing momentum, especially considering the constant growth it's still reporting across most relevant metrics, the fact that the company signaled it's looking to focus on managing costs only half a year after being publicly listed concerned some investors who believe that such a move is premature and Snap should continue aggressively pursuing expansion, i.e. user acquisition. Co-founders Evan Spiegel and Bobby Murphy pledged that they won't sell any stock in the social media giant before 2018 in an effort to not further devalue Snap's market cap, adding that they remain confident in their startup's prospects. Mr. Spiegel noted how Snap is still among the top six most used platforms in the world outside of China, noting how all of the more successful ecosystems are owned by two companies — Facebook and Google — that are significantly larger and more diversified and hence cannot be directly compared to Snap.

The main concern for many investors is that while Snap is gradually improving its performance, it isn't doing so in a manner that's swift enough to compensate for the fact that the Facebook-owned Instagram is successfully copying its major features and increasing the gap in user numbers between the two. While Snap remains seemingly unconcerned by its major competitor, it remains to be seen whether it backs up its confidence with stronger numbers in the following quarters.

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Dominik Bosnjak

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Dominik started at AndroidHeadlines in 2016 and is the Head Editor of the site today. He’s approaching his first full decade in the media industry, with his background being primarily in technology, gaming, and entertainment. These days, his focus is more on the political side of the tech game, as well as data privacy issues, with him looking at both of those through the prism of Android. Contact him at [email protected]
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