Snapchat has blamed the lingering effects of its disastrous redesign for a decline in its number of daily active users.
The messaging company reported its Q2 earnings yesterday. One of the key takeaways was that the number of people using Snapchat daily shrank from 191 million last quarter to 188 million this quarter. CEO Evan Spiegel blamed the 1.5 percent decrease on, “disruption caused by our redesign.”
Snapchat’s quarterly earnings
Snapchat had a lot to prove after its disastrous Q1 earnings this year.
Fortunately, the news was not quite so bad this time. Snapchat beat its quarterly earnings expectations with $262.3 million in revenue, compared to the expected $249.8 million. Snap’s net loss also decreased by 20 percent year-over-year, with a loss of “just” $353 million this quarter next to $385 million last quarter. It did, however, managed to garner a $250 million investment from Saudi Prince Al-Waleed Talal for a 2.3 percent stake in the company.
Ultimately, although the user count fell, revenue actually improved 44 percent year-over-year, which helped trigger an 11 percent lift to stock in after-hours trading.
Evan Spiegel and the management team were also keen to cast a positive outlook for the future. While Spiegel said the redesign had caused “disruption,” he noted that the company has now addressed many of those challenges. He also suggested that the controversial redesign had caused greater retention of users older than 35.
In addition, Snap’s new CFO Tim Stone talked up the monetization potential for different parts of the app, including “communication” possibilities.
Snapchat’s controversial redesign
Snapchat introduced its redesign late last year after CEO Evan Spiegel revealed that Snap had fallen short of expected growth projections for the quarter.
In a letter to investors at the time, Spiegel blamed the difficulties on the service being too difficult for many users to understand. “One thing we have heard over the years is that Snapchat is difficult to understand or hard to use,” he wrote — adding that, “Our team has been working on responding to this feedback.”
However, the redesign quickly caused a backlash among users. At one point, Snapchat’s value even fell by $1.3 billion after reality TV star Kylie Jenner Tweeted about her disapproval of the change, writing “Sooo does anyone else not open Snapchat anymore?”
Snap eventually reversed some of the changes — although clearly the effects are still being felt.
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