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Snap’s loss widened and user growth of its flagship app did not live up to its CEO’s expectations, as the firm deals with competition from Instagram and plans to build a new version of its Android app “from the ground up”.
Meanwhile, Reuters said that China’s Tencent Holdings had built-up a 12 per cent stake in Snap, it what was seen as a vote of confidence. Tencent previously invested in Snapchat before it went public.
According to a regulatory filing made by Snap, Martin Lau, president of Tencent, said his company is “excited to deepen its shareholding relationship with us, and that it looks forward to sharing ideas and experiences”.
Snaps’s Q3 revenue, the majority of which comes from advertisements, increased to $207.9 million from $128.2 million a year earlier, while it posted a net loss of $443.2 million, an increase from $124.2 million.
The company recorded a $39.9 million charge in the quarter related to excess inventory of its Spectacles product, its first foray into hardware.
Co-founder and CEO Evan Spiegel admitted in an earnings call: “Unfortunately, we misjudged strong early demand for Spectacles and purchased more inventory than we now anticipate being able to sell… Moving forward, we will continue to be in the market place with Spectacles and expect modest revenue from the product line.”
He also noted that daily active users (DAU) of its Snapchat app grew “at a lower rate than we would have liked” in the quarter, increasing by 4.5 million.
DAU grew from 153 million to 178 million year-on-year.
On the up side, he noted user engagement “continues to grow at a meaningful clip, with time spent, frequency of use, and Snap creation all increasing, while Snap Ad impressions have grown over 400 per cent year-over-year.”
He also said Snapchat “has likely become the world’s most-used camera, with more than 3.5 billion Snaps created every day, up more than 40 per cent year-over-year”.
Author : Saleha Riaz – Reporter