Snap Plunges Nearly 20% as Quarterly Loss More Than Triples
Snapchat parent records most revenue yet, but growth continues to slow
Snap Inc. SNAP 1.96% said its quarterly loss more than tripled, disappointing Wall Street again as it failed to significantly grow the number of people using its app daily or the amount of money advertisers are spending to reach those users.
For its third straight quarterly earnings report as a publicly traded company, it failed to live up to Wall Street’s forecasts for revenue. Snap, the parent company of the messaging app Snapchat, said revenue in the third quarter rose 62% to $207.9 million. Analysts polled by FactSet expected $236.9 million in revenue.
Shares were down 18% in after-hours trading.
The revenue haul was the most Snap, which is based in Venice, Calif., has logged yet in a quarter. But it also marked another three months of decelerating growth for a company not yet a year removed from its initial public offering. In the second quarter, Snap’s revenue more than doubled to $181.7 million.
Snap said it added 4.5 million daily users during the quarter, bumping its total user base to 178 million but representing the slowest growth since the company started reporting the figure. Analysts surveyed by FactSet expected Snap would add 8 million new daily users during the quarter.
Nearly all of Snap’s revenue comes from advertising. The company is competing for ad dollars against not only Facebook , a behemoth social network that counts more than a billion daily users, but also its rival’s Instagram photo-sharing app. Instagram’s Stories feature, a package of ephemeral videos and photos that copies Snapchat’s own popular Stories feature, crossed 300 million users in the third quarter, Facebook said.
Snap’s quarterly loss came to $443.2 million, or 36 cents a share, significantly wider than the $124.2 million loss reported a year earlier. Expenses ballooned from a year earlier, to $669.8 million from $259.2 million. The company said it recorded $39.9 million in charges related primarily to excess inventory of Spectacles, its video-recording sunglasses.
During the quarter, Snap’s shares fell below their initial public offering price of $17 for the first time as the shine of being a newly public company dulled and investors began looking for evidence Snap can snag a bigger portion of marketing budgets.
In an effort to draw more users and marketers, Snap added new features in recent months, including letting people share their location and giving advertisers new ways to sponsor content and more data on ad performance.
Still, Snap faces bumps ahead. As the year comes to a close, advertisers typically are less willing to devote money to their test budgets that experiment with new technologies, said Lance Neuhauser, chief executive of 4C Insights, a marketing-technology company that helps companies buy ads on social media, including Snap.