By Adam Fraser
Snapchat continues to experience a bumpy ride as a listed company.
As I previously wrote, it disappointed the market with its first quarterly results as a listed company. This pattern continued as it delivered its second set of quarterly numbers – the already troubled share price fell a further 17% and now sits well below the initial IPO price.
If you want to dive into the details, you can check the detailed financials, investor presentation and press release around the quarterly numbers. If you want a quick summary, the 10 key takeaways from the Q2 2017 results are below:
- Daily Active Users (DAUs) grew to 173m from 166m in the prior quarter (4% growth) and 143m a year ago (21% growth).
- Average revenue per user was US$1.05 compared to $0.90 in the last quarter and $0.50 a year ago – this is well below the levels achieved by Facebook.
- Revenue for the quarter was US$182m compared to $150m last quarter and $72m a year ago.
- The user and revenue growth was under the level expected by the market, leading to the negative response in the share price.
- Net loss was $443m for the quarter, compared to a massive US$2.2bn in the prior quarter – note this figure was inflated by the expense associated with stock issues related to the IPO.
- Instagram stories reported in the latest Facebook announcement, that it had 250m users, showing the extent to which Instagram is successfully taking Snapchat head on via imitation of its key features.
- USA DAUs were 75m, representing 43% of global users, a ratio that has been broadly consistent for the past 12 months
- The USA, however, drove 81% of global revenues, showing the more rapid advertiser adoption in the company’s home location compared to the rest of the globe.
- Capital expenditure for the quarter was $19m, broadly consistent with the past 12m when the quarterly amount has varied between $16m and $20m.
- Adjusted EBITDA (removing the impact of stock based compensation) was a loss of US$194m for the quarter, the highest quarterly loss in the period reported (which went back to Q2 2016).
Snapchat is learning what Twitter has learned over recent years – analysts will focus obsessively on short term user growth almost to the exclusion of every other metric, making long term strategic planning a challenge to execute in a listed company environment.
Still valued at US$15bn whilst significantly loss making, Snap Inc is learning that when investors price perfection, even small disappointments will lead to the harshest of share price responses.
Snapchat is growing its user and revenue base. But its losses are also growing. And the glare of the public markets can be an uncomfortable environment to innovate, evolve and pivot whilst also attempting to drive profitability.
Snapchat has by no means completely lost its luster and its loyal, engaged millennial audience remains highly attractive to marketers. However competition from Facebook and Instagram is fierce, and much of its IP has been easily imitated. The road ahead does not look to be an easy one as Snapchat attempts to justify what remains a massive valuation relative to its actual financial performance.