Snap Posts Less-than-Thrilling Post-IPO Financials

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Snapchat parent company Snap has released its first earnings report post-IPO, and they’re not great. Revenue for the first quarter of 2017 was $149.6 million. That compares to a loss of $2.2bn, as the company struggles to keep ahead of its fast-paced social media competition. Analysts had predicted today’s report to put revenue around $158m, while losses would be just over $2bn.

The number of active daily users, which many industry experts had called as the most significant statistic of the day, was up to 166m this quarter from 158m last. That stayed true to predictions of a 7-11m rise.

Still, Snap’s stock was down over 18% following the news, which Wall Street has viewed as lackluster.

Snaps average revenue per user rose to $0.90 from $0.32 a year ago, when the firm was beginning to monetize its flagship product. However that figure was down on the $1.05 reported in Q4 2016, before the company’s March IPO. Hosting costs also rose from $0.52 in Q4 2016 to $0.60 this quarter. And capital expenditures leapt to $18m from $12.5m.

The $3.9bn Snap raised at its March offering was southern California’s biggest-ever stock market debut. The offering was also significant because the company, founded in 2012 by Evan Spiegel and Bobby Murphy, said it would refuse to give shareholders a vote in company decisions.

CEO Spiegel, who has not made a public address in two years, will field tough questions from backers and industry insiders at a call scheduled for 1.30pm PST. Snapchat has become a darling of the social media industry for its quirky filters and fast access to stories. But other, bigger rivals have upped their game too.

In March Facebook launched its own Snapchat-esque video features, which immediately wiped 6.8% from Snap stock value. Instagram Stories, unveiled last August, has rapidly overtaken Snapchat with 200m users. Even WhatsApp has come up with a Snapchat-facsmile bolt-on, WhatsApp Status, which has the added value of being encrypted.

Snapchat has fought back with features like the ability to draw emoji shapes, and to erase people’s heads from a frame. But they have been poorly received by users. Some investors have already singled out Snap shares as “junk”.