ShareThis Page
Snapchat user base grows 2%, Snap shares climb | TribLIVE.com
News

Snapchat user base grows 2%, Snap shares climb

1066571_web1_SnapchatApp
AP
Snap Inc. released its first-quarter earnings report Wednesday, saying its user base grew 2 percent to 190 million.

Snap Inc.’s fortunes rise and fall on the size of Snapchat’s user base.

When the user numbers started to decline in early 2018 because of a tumultuous redesign and flabby Android app, its stock price began a long slide to less than $5 a share. Executive churn followed, and a dark cloud seemed to hang over the Santa Monica company’s future.

When its earnings report in February showed that the bleeding had stopped, Snap shares began a rally, more than doubling in price after closing at $11.99 on Tuesday.

After the closing bell Tuesday, Snap released its first-quarter earnings report, which contained more good news: Its user base grew 2 percent to 190 million — a number the company says includes 90 percent of 13- to 24-year-olds and 75 percent of 13- to 34-year-olds in the United States. Snap’s shares climbed in after-market trading, cresting at $13 before giving back some of those gains.

In addition to reversing the decline in users, the company has also steadily increased the amount of money generated from each of those sets of eyeballs, above and beyond most observers’ expectations. Snap posted a net loss of 10 cents a share for the quarter, an improvement from its loss of 17 cents a share in the same quarter last year.

Revenue was $320 million in the quarter, up 39 percent from the year-earlier quarter, it said.

Much of that positive change came from fine-tuning the company’s algorithmic advertising platform after a rocky launch, said Evan Spiegel, the company’s 28-year-old co-founder and chief executive.

“The improvements we have made to our cost structure over the past year were largely due to efficiencies we found in our products and operations that outpaced our growing investments across our content, gaming, augmented reality and advertising platforms,” Spiegel said in a statement.

Snap announced a new set of products at its first major media event last month, including social gaming, a new clutch of Snapchat-specific scripted shows, and a suite of video ad integration tools to increase its utility for advertisers.

The company attributed some of the uptick in user numbers to the long-awaited redesign of the Snapchat app for Android phones, which make up a slim majority of smartphones in the U.S. but are an overwhelming market leader in the rest of the world.

For years, the Snapchat app was too processor- and data-intensive to run effectively on many Android handsets, especially the more affordable models popular in developing countries. The hope is that the new lightweight version, backed by efforts to make some of Snapchat’s augmented reality lenses and other products culturally specific to new markets such as India and Malaysia, will continue to grow overseas.

Growth comes at a cost. Millions of new users require more cloud computing space to deliver content quickly, and the company projects that rising Amazon Web Services and Google Cloud bills will lead to higher losses in the second quarter of 2019.

Analysts are feeling bullish as Snap pulls out of its long slide.

“For the last year it almost felt like they were a deer in the headlights,” said Richard Greenfield, an analyst at BTIG. “The recovery has begun.”

He’s encouraged by Snap growing its user base, offering more to advertisers and last month rolling out a suite of new products such as games — which have yet to prove lucrative but could lead to more time spent on the app, and with it increased ad revenue.

——

©2019 Los Angeles Times

Visit the Los Angeles Times at www.latimes.com

Distributed by Tribune Content Agency, LLC.

———

PHOTO (for help with images, contact 312-222-4194):

Categories: Business | News
TribLIVE commenting policy

You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.

We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.

While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.

We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers

We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.

We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.

We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.

We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.