Redesigned Snapchat sees users drop by 3 million for quarter

Jamie McCarthy  Getty Images for Tribeca Film Festival

Jamie McCarthy Getty Images for Tribeca Film Festival

Daily Snapchat users fell to 188 million in the second quarter from 191 million in the prior quarter.

Snapchat's controversial redesign has sent users running for the exits. Critics in the past have anxious about Snap keeping user engagement up, keeping the users coming back and keeping them using the application, which is declining in some areas while growing in others, leading investors to boost the stock up in after hours trading although it has since levelled back to around the closing price.

More than six months later, Snap is now blaming the same design for a decline in its daily active users.

In prepared remarks in a call with analysts, CEO Evan Spiegel attributed this drop-off to the app redesign: "While our Monthly Active Users continued to grow this quarter, we saw a 2 percent decline in our Daily Active Users".

After a tumultuous first year as a public company, Snap is starting to show some stability, despite the slowdown in user growth.

Saudi Arabia's Prince Alwaleed bin Talal announced soon after the results that he had finalized a $250 million deal in May to buy a 2.3 percent stake.

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Snap shares have dropped 10 percent since the beginning of the year. In other words, it's losing users, but it's making more money. That has come at the cost of the premium feel Snap had tried to ascribe to its ads, but given overall sales a jolt by attracting more advertisers.

Earnings from Facebook and Twitter in recent weeks spooked social media investors by showing issues around data privacy, abusive content and phoney accounts were weighing on user growth and sending expenses higher. It is also an increase of 13.6pc on the results from Q1 2018. Wall Street had forecast a loss of 17 cents per share for the second quarter.

Snapchat is popular for private messaging, but most of the ads Snap sells accompany videos that are shared with a wider audience.

Snap generated some $262.26 million in revenue during the quarter ending June 30, compared to $181.67 million during the same quarter a year ago.

But the change has made it more hard for Snapchat to distinguish itself from other video-heavy apps and draw premium prices.

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