Snapchat loses three million users in three months

Snapchat Parent Snap Posts Its First Loss in Daily Active Users

Snapchat Parent Snap Posts Its First Loss in Daily Active Users

Shares in Snap were flat in after-hours trading following volatility that saw them fall briefly before surging more than 12 percent.

The earnings report didn't have any specific sales figures for its latest Spectacles hardware, though it did report $2 million in non-advertising revenue.

Prince Alwaleed bin Talal has acquired a 2.3 percent stake in Snapchat in a deal worth $250 million (SR950 million).

Snap on Tuesday reported higher-than-expected quarterly revenue but its first-ever drop in daily Snapchat users.

But the share prices gave up much of those gains soon after, as the news sunk in that the company's user base wasn't growing as expected, with Snapchat losing daily active users quarter-over-quarter for the first time in its history.

The company has struggled with a rocky redesign widely criticized by users. According to Spiegel, new Snapchat users are primarily using Android, and it's been trying to completely rewrite its Android app for over a year now. Snap previously didn't disclose any monthly user numbers, with executives arguing that daily actives better reflected the activity on the platform.

The company behind Snapchat posted revenue of $262.3 million in the period, also topping the estimate of $247.2 million. That topped Wall Street forecasts of $250 million.

The new design, which was reportedly spearheaded by Spiegel himself, prompted an outpouring of anger from users nearly immediately. Both companies shed some 19 percent in market value after reporting.

"It's always going to be a niche platform, so the modest change isn't very remarkable", said Pivotal Research's Brian Wieser. Users spend an average of over 30 minutes on Snapchat every day, he added, and user retention for people older than 35 has increased more than 8 percent.

Snapchat founder and Snap CEO Evan Spiegel blamed the decline in users on the redesign of Snapchat earlier this year.

Snap said ending leases in Venice, California, to consolidate offices a few miles north in Santa Monica cost it $3.9 million in the second quarter and would result in total expenses of $25 million to $45 million in 2018, mostly in the current quarter.

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