Snapchat is feeling the pressure, as its user base shrinks for the first time since the company went public in March 2017.
In prepared remarks for today’s Earnings Conference Call, Snap confirmed that the redesign cost the app millions of users. The number of daily active users dropped by 2 per cent, from 191 million to 188 million in just a quarter.
As stated in a popular petition, many users found the redesign, separating updates from friends and brand content, “annoying”, “useless” and made the app “more difficult” to use.
Snap CEO Evan Spiegel acknowledged these complaints in his remarks. “It has been approximately six months since we broadly rolled out the redesign of our application, and we have been working hard to iterate and improve Snapchat based on the feedback from our community,” said Spiegel.
“We feel that we have now addressed the biggest frustrations we’ve heard and are eager to make more progress on the tremendous opportunity we now have to show more of the right content to the right people.”
However, the company’s financials beat investors’ expectations. Revenues rose 44 per cent year-on-year to US$262.26 million, while net losses declined from US$443 million a year ago to $353 million during the quarter. Average revenue per user also increased to $1.40 from $1.05 a year ago.
Many analysts believe Snapchat is close to its peak. According to FactSet, many analysts believe that the app’s audience will grow by only a million daily active users. On the other hand, RBC’s Mark Mahaney said the app has reached its peak and will not increase its audience numbers anymore.