Snap's stock price plummeted during the hours after trading today after its first quarter earnings report. Shares fell by more than 15 percent, or approximately one sixth of their value. Although the application increased its global users by approximately four million since the last quarter, it earned less money per user.
During the previous quarter, the company earned $ 1.53 per user worldwide, or $ 286 million in total revenue. This quarter, it was reduced to $ 1.21 per user and $ 231 million in revenue. Even so, that is a great growth since just over a year ago when its quarterly income was $ 150 million. The company's CFO, Drew Vollero, says he expects an even bigger fall in the second quarter of this year.
He said: "As we think about our revenue growth rates year after year, we are planning our growth in the second quarter, rate to decelerate substantially from Q1 levels, with growth in auction impressions, partially offset by the prices for both Snap Ads and creative tools. "
The bad news comes after a surprisingly good performance from Snap last year in which it increased its users and revenues significantly. The stock grew by 25 percent as a result. The lack of revenue growth follows the implementation of the redesign of the Snap application, which he said would help users to separate their personal lives and brand content. Those users rebelled once the redesign finally got underway and they filed a petition in an effort to get the company back to its old user interface.
CEO Evan Spiegel acknowledged the unhappiness of users today and said: "such a big change for current behavior comes with some interruptions, especially given the high frequency of our community's daily participation". He says that the team is now focusing on optimizing the design, such as placing stories of creators and tales of friends to the right of the camera. (Snap moved the Friends 'Stories to the left of the camera to combine them with friends' chats.) Spiegel also says that the team is working on its Android application, which is "still a weakness".
Strangely, no one mentioned Spectacles in their prepared comments, even though the company just announced the second version last week. Reminder: the company lost almost $ 40 million in unsold pairs of its first version.