The backlash to the Snapchat redesign continued to depress user figures in the second quarter of 2018. But Snap Inc. still beat analyst expectations and earnings in its latest financial report on Tuesday (Aug. 7), boosting the company’s share price by as much as 11 percent.
Daily active users declined 2 percent year over year in Q2, to 188 million.
“This was primarily driven by a slightly lower frequency of use among our user base due to the disruption caused by our redesign,” CEO and Co-founder Evan Spiegel said during the post-earnings conference call. “It has been approximately six months since we broadly rolled out the redesign of our application, and we have been working hard to iterate and improve Snapchat based on the feedback from our community.”
Snapchat’s daily active user base increased 8 percent quarter over quarter. Average revenue per user hit $1.40, a 34 percent year-over-year increase from Q2 2017. The company also reported other areas of growth as it competes against Facebook-owned Instagram and other platforms. “The number of people that watch Publisher Stories and Shows on iOS every day has grown by more than 15 percent this year, and we are excited to bring the learnings from our iterations on iOS to our Android application,” Spiegel said.
He also said new user retention for older consumers stood as a bright spot in Q2. “New user retention for people older than 35 has increased more than 8 percent since we launched the redesign,” Spiegel said.
New users to Snapchat are “predominantly using” Android, he said, and the company has been working for over a year to “completely rewrite our Android application.” He gave no timetable for the completion of that Android work, but indicated in could run into 2019.
Also in the company’s future are more offerings centered around augmented reality — one current example is Lens Explorer, a tool designed to make it easier to find lenses created by other Snapchat users. “We also released Snappables, new augmented reality experiences that can be shared with friends,” he said.
Snap revenue increased 44 percent year over year in the second quarter of 2018, reaching about $262 million, beating analyst expectations of $250.4 billion. International revenue accounted for 33 percent of total revenue — that represents a 26 percent year-over-year increase. Advertising revenue posted a 48 percent year-over-year increase, to $260 million, “driven by traction in our global online sales business, which includes SMBs and sales partners, and strong growth in international countries,” said Chief Financial Officer Tim Stone during the conference call.
Loss per share stood at 14 cents, below expectations of 17 cents. Net loss decreased 20 percent year over year to $353 million.