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Snap user numbers plummet

by LLB Reporter
26th Oct 18 7:54 am

Social media darling Snap  has revealed that user numbers still falling, but product innovation keeps revenues moving forwards

Daily Active Users (DAUs) fell 1% on the previous quarter to 186m, but the success of new product innovations, such as Product Catalogues, Shows and Snap Pixel, means revenue jumped 43% year-on-year to $298m.

Free cash flow improved, but remained negative at -$159m. Total net cash fell $43m over the quarter.

The shares fell 3.4% in post market trading.

Nicholas Hyett, Equity Analyst at Hargreaves Lansdown:

“Recent quarters have seen active user numbers struggle, although the financial impact of that has been minimal thanks to average revenue per user continuing to climb.

That’s down to some impressively successful innovations. The company’s short form TV is a standout. 21 Shows now have a monthly audience of over 10m and James Corden’s offering has won two Emmy’s.

Ultimately though Snap needs to get it’s user base growing again. It’s 186m active users pales in comparison to Facebooks 1.47bn – and Facebooks user base is still growing. Social networks are called networks for a reason, if everyone’s on it, you need to be on it too. If no one’s online, then it doesn’t matter how cute those rabbit ears are, because no-ones watching.

Profitability is the big hurdle for Snap, and an internal memo from CEO Even Spiegel suggests 2019 could be the year it cracks out a little black number for the first time. Product innovation may help it get across the line, but it’s prime product is millennial eyeballs and those seem to be slipping away.”

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