Arthur J. Villasanta – Fourth Estate Contributor
Stanford, CA, United States (4E) – Popular multimedia messaging app Snapchat hopes it can break-even this year despite losing more users and contenting with a drop in the average revenue is makes per user.
Snapchat admitted to losing two million users in the third quarter, reducing its total user count to 186 million. Despite this droop, user count is still up % year-over-year, claims Snapchat.
On the bright side, Snapchat earned $298 million in revenue with an EPS loss of $0.12, during Q3, beating Wall Street’s expectations. It lost $325 million in Q3 compared to $353 million in Q2, so it’s making some progress with cost cutting.
On the dark side, Snapchat’s average revenue per user (ARPU) dropped 12.5% in the developing world this quarter. Strong gains in the U.S. and Europe grew global ARPU by 14%, however. Snap projects $355 million to $380 million in holiday Q4 revenue.
CEO Evan Spiegel admitted that “While we have incredible reach among our core demographic of 13- to 34-year-olds in the US and Europe, there are billions of people worldwide who do not yet use Snapchat.”
He noted the 2 million user loss was mostly on Android where Snapchat doesn’t run as well as on iOS. Spiegel previously said his stretchs goal is to break-even this year and attain full-year profitability in 2019.
CFO Tim Stone said that looking forward to 2019, Snap’s “internal stretch output goal will be an acceleration of revenue growth and full year free cash flow and profitability. Bear in mind that an internal stretch goal is not a forecast, and it’s not guidance.”
Spiegel also admitted Snaps created per day fell from 3.5 billion to 3 billion per day, but tried to reassure investors by saying over 60% of Snap’s users are still creating snaps every day.
Spiegel said expanding beyond the 13 to 34-year-old demographic in the U.S. and Europe, plus adding more users in the developing world via an improved Android app will be needed for Snap to restore its flagging momentum.
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