In its first fiscal quarter as a public company, Snap Inc. lost more than $2 billion.
Snapchat's parent company just posted its first-quarter earnings report on Wednesday, May 10, with losses ballooning up to a startling $2.2 billion.
Snap's $2 Billion Loss Broken Down
The company notes, however, that much of the losses resulted from one-time expenses related to stock bonuses shelled out after Snap Inc.'s successful initial public offering — with CEO Evan Spiegel reportedly having nabbed a cool $800 million, in fact. In addition to Evan Spiegel's "CEO award," Snap previously said it had another $1.1 billion in employee stock awards that would come into effect after it goes public. A more detailed breakdown should be released once the company files its Q1 2017 report with the SEC.
That said, the company behind the popular photo-messaging service is still on a plunge. If you take out the the employee bonuses and other costs, Snap's losses essentially doubled. It burned much of its cash — $104 million — in Q1 2016, and for the first quarter this year, it lost $208 million.
Even more startling is the fact that Snap lost money despite recording an average revenue per user of 90 cents, which is 14 percent higher than last quarter; up 181 percent from the same quarter last year.
How Wall Street Reacted
Needless to say, the bigwigs at Wall Street aren't too pleased. Snap Inc. pushed a first-quarter earnings revenue of $149.6 million — significantly higher than the $39 million it brought it last year. Still, it's lower than what Wall Street was expecting — they predicted Snap to generate $158 million in Q1 2017.
Snapchat User Growth And Daily Active User Count
On the bright side, Snap's user growth did increase by 8 million in the first three months of 2017, with the company recording a total of 166 million daily active users. For comparison's sake, rival Instagram, which Facebook owns, boasts 400 million daily active users.
Is Facebook To Blame?
Snapchat's user growth is a key component of its earnings report. In the latter half of 2016, Snap's growth slowed down, in large part because of Facebook seemingly going in for the kill by copying Snapchat's marquee features. Case in point: Facebook, and many services it owns — Instagram, WhatsApp, Messenger — now feature a Stories clone.
In fact, one of such clones, Instagram Stories, now has more daily active users than Snapchat — at 200 million. There is significant concern that Facebook might purposefully be stunting Snapchat's growth. The rivalry has always been present between the two, especially when Snapchat balked at Facebook's acquisition offer years ago.
For now, it's hard to say whether Facebook is truly to blame for Snapchat's decline, especially when the company itself stresses that the losses mostly come from stock-based compensation and bonuses. But if Instagram Stories gets more traction, which it likely will, Snapchat needs to pivot its service and expand to other fronts, thereby making the app more unique than rivals.
Thoughts about Snap's first earnings report as a publicly traded company? Do you think it can weather Facebook's repeated attempts to copy its features? Feel free to sound off in the comments section below!
