According to its Q2 2018 earnings, Snap Inc. lost a lot of users this quarter, which marks its first ever user count decline. Last quarter, Snapchat had 191 million active users — that dipped to 188 million this quarter.
Despite this, Snapchat managed to beat Wall Street expectations with $262.3 million in revenue and a loss of $0.14. Stock experts had predicted it would post a loss of $0.17 and earn a revenue of just $249.8 million.
Snap's Q2 performance represents a 44 percent year-over-year increase from Q2 2017's $182 million revenue.
Snap Inc.'s net loss decreased by 20 percent year-over-year, so it only managed to burn $353 million this quarter compared with $385 million in the previous quarter. In other words, the company is still bleeding cash, but not as much as before.
The Snapchat Redesign Might Have Made Things Worse
Snap CEO Evan Spiegel had hoped a radical redesign of Snapchat would help lure in more users to the platform, but clearly, the opposite ended up happening. The decline is not at all surprising: 1.2 million users around the world signed a petition begging the company to revert to the old design, but to no avail. Snap followed through with the redesign, and now it has lost 2 percent of its daily active users after one quarter.
In his remarks, Spiegel said the company took users' feedback seriously.
"We feel that we have now addressed the biggest frustrations we've heard and are eager to make more progress on the tremendous opportunity we now have to show more of the right content to the right people."
Snapchat's stock is up too, possibly because Saudi Prince Alwaleed Bin Talal acquired a 2.3 percent stake in the company.
How About Snap Spectacles?
Snap Inc. remained quiet on the hardware front, not divulging sales of Spectacles, which was relaunched this past quarter. The first-generation of the wearable device was a hit among Snapchat users, letting them capture and share snaps using their hip-looking sunglasses. Shortages and problems in availability largely kept it from users' reach, and by the time there was enough stock again, public interest had already fizzled out.
Spiegel did mention the Spectacles but only briefly, saying that he envisions them as being essential to the company's future plans centered around augmented reality.
Ultimately, the numbers only paint a bleak portrait of Snapchat's future, especially considering how much damage it has taken since Facebook started cloning its core features and porting them across its apps. By contrast, there are 400 million Instagram Stories users and 450 WhatsApp Status users. Facebook is a huge roadblock in Snapchat's path to success, and it's not going to get easier as it bleeds users.