Published: Fri, May 12, 2017
Business | By Max Garcia

Snapchat parent company reports £1.7bn loss in first earnings report

Shares of Twitter Inc, which competes with Snap and had 328 million average monthly active users in the latest quarter, had also tumbled 24 percent after its first quarterly report. However, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were negative at US$188.2 million, doubling losses of US$93.2 million a year earlier. Revenue was also down from the fourth quarter of 2016, a seasonally stronger period for ad sales, when it was $166 million.

The BBC reported that in a conference call Evan Spiegel, co-founder and chief executive, said: "We still have a lot of work to do, but we are excited by the amount of progress we have made in such a short time".

The camera and social media company had its IPO on March 2, which was the biggest Wall Street debut in three years.

Earlier this week, Snapchat announced it would allow users to send images and video without time limits for the first time, expanding one of the app's signature features in what is seen as an attempted fightback against Facebook.

Spiegel had a biting response to Facebook's copycat tactics: "Just because Yahoo has a search box doesn't make it Google". The IPO raised $3.4 billion and gave the company a market valuation of roughly $24 billion, and shares surged 44 percent in their first day of trading.

The owner of Snapchat lost more than $2 billion during its first quarter as a publicly traded company.

The company reported a net loss of $2.2 billion (yes, with a "B") for the quarter, due in large part to $2 billion in compensation costs tied to going public. As of March, the company said it had about 161 million daily users.

Snap said average revenue per user rose 181.3 percent to 90 cents in the first quarter while revenue jumped almost four-fold to $149.6 million.

Snapchat hitting 158 million users in 2016 was significant (the service grew 48 percent in one year), but the app's growth significantly slowed down by the end of the year.

Revenue rose 286% for the quarter to nearly $150m, but was also short of forecasts by about $9m.

"Snap is emerging as the new stubborn, slow-growing Twitter amidst similar Facebook competition and reluctance to filter its feed that Twitter exhibited four years ago", the report added. "So far, Instagram Stories is believed to have detracted the most from Snapchat's existing user base, but Facebook Stories also appears to be gaining ground".

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