Facebook's shadow continues to hang over Snapchat.
Chief executive Evan Spiegel downplayed growth concerns, saying that Snapchat isn't interested in strategies - such as pestering users with notifications - that could pump up the number of people who use its app daily. By Snap's own estimate, 41% of USA adults ages 18-to-34 check out Snapchat every day.
And it doesn't seem, so far, that Snap has been able to. The company's adjusted loss was $10 million higher than analysts had expected while its net loss went from $104.6 million to $2.2 billion due to costs related to the initial public offering (IPO) earlier this year.
Snapchat has 166 million active users, which are up 5% from 158 million in Q4 2016 and represent a 36% increase year-over-year. Facebook-owned Instagram launched its Stories last August and has amassed more than 200 million daily active users as of last month - 20 percent more than Snapchat. There was some speculation as to whether Spiegel would miss today's call and leave it to his deputies. Snapchat now has a magic eraser, an emoji pen, an infinity timer option, and an endless loop tool for snaps.
"We believe that everyone is going to develop a camera strategy", Spiegel continued, before dropping what can only be described as an epic burn.
Spiegel laughed before responding that when Google arrived on the scene, everyone wanted to be in search - and then when Facebook came along, everyone wanted to be in the social game.
It was a solid burn, but the numbers show the challenge Snap is now up against.
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Snap said average revenue per user rose 181.3 percent to 90 cents in the first quarter. For the same quarter a year ago, the company was $104.6 million in the red. Snap lost $2.31 per share, but was expected to only lose 21 cents.
It's not clear how much these competing products have hurt Snapchat. "But I do think at this point, we're pretty much ahead in terms of the technology that we're building". Probably a good call since Android devices make up almost nine in ten phones in the world. Mr. Spiegel tried not to dismiss the rest of the world's billions, making the case that Snap only works well when mobile connections are strong. The company also has a $1 billion deal with Amazon Web Services. The company generated most of its revenues from advertising, but brought in $8.3m from elsewhere, largely driven by its Spectacles smartglasses. It also spent $805 million on research and development.
Despite the disappointing results, Snap's nascent ad business is seeing traction via its programmatic API, which is now live in 24 countries.
Snapchat has tried to become more like its bigger rival by courting new users and, with them, advertisers.
Put another way, revenue was hardly enough to overcome the huge IPO expenses.
Average revenue per user was 90 cents in the first quarter, Snap said, up from 33 cents the same quarter a year earlier but below the $1.05 per user in the fourth quarter of 2016.
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