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Snap Inc. Reports First Quarter 2017 Results
- whatok 9y agoDown 18%~ right now. Low of 18.15. #s are worse than could imagine.
- goatherders 9y agoI don't know. Some of us could imagine them pretty bad.
- flamedoge 9y ago23%
- cody3222 9y agoAnd Facebook is up in after-hours trading
- awkwardtortoise 9y agoIt's down 25%.
- ceejayoz 9y agoThat's Snapchat, not Facebook.
- awkwardtortoise 9y agoI know. Aren't we talking about SNAP's earning? Edit: Nevermind. I replied to the wrong comment.
- ProfessorLayton 9y ago2B in employee stock compensation!
- non_sequitur 9y agoOne of the funnier parts is that for revenue, they grew +286%. for losses (which +2200% if you include the stock comp), there is no percentage listed, just "NM" (Not meaningful)
- nemo44x 9y agoAbsolutely disgusting. An issue with tech in general is the equity rewards are far too generous - especially at the top. I have direct plays in a few technology companies I admire and some of them annoy me with the ridiculous grants. We're looking at like 10% dilution over a year for some companies that aren't profitable. And it seems very concentrated at the management level. For SNAP it's especially bad considering that the common shares are non-voting if I recall.
- acchow 9y agoIn a single quarter? That seems excessive. I should have joined Snap.
- jondubois 9y agoWell they have to pay them big money to keep them quiet.
- myroon5 9y agoAverage revenue per user (ARPU) decreased 14% over Q4 2016. DAUs increased 5% quarter-over-quarter. $2B in employee stock compensation. Net loss of $2.2B in this quarter alone.... This looks really bad.
- chollida1 9y agoSome quick highlights as to why the stock is being punished. > Adjusted Ebitda Loss $188.2M, Est. Loss $176.9M > 1Q Daily Active Users 166M, Est. 168M > 1Q Rev. $149.6M, Est. $158.6M > 1Q Loss/Shr $2.31 I'm guessing the big issue is the miss on Daily active users. This is the same thing that caused the street ot hammer twitter. Rule of thumb for non profitable tech companies.... If you are a company that isn't making a profit and you continually preach look at the users, look at the users. and then fail to even hit your target on that, you're going to get punished.....heavily. Or put another way, you can either make a profit or make your non GAAP numbers, but you have to atleast hit one of the two. One other issue from the Bloomberg momentary.... > A very key number here is revenue per user. Snap's results today are indicating average revenue per user at 90 cents. This is down from $1.05 (14%) from what it reported for Q4 2016, before its IPO. To be completely fair, SNAP management wanted full control to build for the long term and Facebook was down 12% after their first earnings report and Twitter was down 24% so it might just be that its painful for rookie CEOs to manage a public company. Too bad for employees that this comes before the lock up period ends. EDIT Just on the earnings call, they said they don't break out Spectical's numbers but the revenue it generated was about $8 Million.
- tlogan 9y agoI do not think that investors are concern about net loss - at least I'm not. I'm disappointed by anemic growth: Facebook has 18 percent increase year over year. They have ~2B users [1] This q Snapchat had growth of ~5% which will be about ~20% per year. But they are 10x smaller than Facebook. [1] Facebook 5/3/17 earning report
- monkmartinez 9y agoI saw Scott Hanselman spin up 1000 Azure instances in a demo today; How many bots can each instance support? Instant growth. How much social media activity/growth is not human?
- zeusk 9y ago> How much social media activity/growth is not human? As much as I agree with you, that kind of activity especially by first party or those related is called market manipulation. SEC and investors won't take lightly to it.
- jasondc 9y ago#1 metric investors were focused on was user growth, similar to Twitter
- zkirill 9y agoIs there any public company that releases earnings in realtime rather than quarterly and/or annually? Has this ever been tried? Is there any rational behind earnings being reported quarterly/annually besides it being aligned with existing regulatory and accounting procedures?
- valuearb 9y agoThe procedures to produce an SEC report take time and aren't automatic. Management discussion, etc. As a former professional investor quarterly is fine. i want mgmt focused on running the business, not reporting to investors. Anyone who wants more frequent data so they can trade the stock can hit the road as far as I care.
- zkirill 9y agoInteresting! Thank you for your perspective and insight. Do you think that having some data reported automatically in realtime could minimize surprises such as what we see here? Perhaps then the quarterly reports could be more focused on describing the longterm strategy and market landscape?
- x2f10 9y agoTransmitting real-time data that's in accordance with GAAP would be quite a feat due to the amount of adj entries that are required.
- kristianc 9y agoCompetitive sales teams in the enterprise sales world would be all over that data to try to spin a narrative and for competitive intel. Agree that it wouldn't be massively helpful.
- valuearb 9y agoAnnual reports are for strategy. If you buy shares in a business that changes strategy on a monthly basis, you don't need more rapid reporting, you need to get out. Go read Buffetts annual shareholder letters, they are free on the internet going back 40 years. He repeatedly makes the key point that your investments need to have some enduring competitive advantage, if they do you don't need constant upgrades, if they don't sell. Enduring competitive advantages don't disappear over night, if they degrade they do it slowly over many years.
- ithinkinstereo 9y agoUser growth is plummeting: Q4'15 - 13.8% Q1'16 - 14% Q2'16 - 17.2% Q3'16 - 7% Q4'16 - 3.2% Instagram Stories launched Q3'16. Going forward, growth is going to be flat, maybe even negative, now that every messenger service now has their own Stories clone.
- winslow 9y agoWhile a very small market segment but I've noticed that my user demographic's snap story usage has been in rapid decline. The people whom I saw using snap stories the majority of time, have since cut their usage in half if not completely and switched to Instagram stories. Going to be very interesting to see how they handle user growth & user engagement.
- ithinkinstereo 9y agoYeah I see the problem as double-edged: 1) Teenage users, their bread and butter, are leaking out to Instagram 2) Older users, their growth market, are being "stolen" by the various messaging apps that they're already on (plus Instagram) So now they have to simultaneously fend off Instagram draining their primary userbase, while also competing with all the popular messenger apps cloning their main product feature. The latter is going to be just as difficult as the former. Overseas, WhatsApp (Europe), and WeChat and Line (Asia) are going to seize whatever int'l growth they were hoping to grab. In the US, chances are that if Stories catches-on with the older crowd, it'll be through either Instagram or the various messenger apps they're already on. During the IPO roadshow, SNAP was trying to position itself as a media/entertainment company, but media companies will follow the audience, and it's hard to see them sticking it out with SNAP if viewership numbers falter. Hard to see how they claw their way out of this. The comparisons to FB are poor IMO because they at least strong MAU growth going for it and no real viable competitors with an alternative product. Even the comparisons to Twitter are flawed. The doubly whammy of decline growth + decline revenue per user is creating the perfect storm for SNAP.
- BinaryIdiot 9y ago> Going forward, growth is going to be flat, maybe even negative, now that every messenger service now has their own Stories clone. This is my thinking as well. Stories was a good idea but there wasn't anything proprietary about it and now that a larger service (Instagram) copied it much better there isn't much point to using it on Snapchat anymore. I would imagine their users will continue using their silly filters and doing direct messaging but so many apps have built in filters now I don't know that it is a big enough differentiator anymore. I think the performance of their stock is going to depend on how well they execute on a new product like spectacles.
- pm90 9y agoLets not forget that Facebook lost a lot lot of money before finally discovering a way to monetize its services. This is SNAP's first public earnings report. Disclosure: Not a user or stock holder of SNAP
- valuearb 9y agoThey never lost money at SNAPs rate as a public company.
- Analemma_ 9y agoThey never saw the huge dropoff in YoY DAU increase that Snap is seeing either.
- ceejayoz 9y agoFacebook didn't have a competitor with 20x the market cap doing a great job of rapidly copying their distinguishing features.
- rjvir 9y agoOver 1000 Googlers were cranking on Google Plus, which at the time was a Facebook copy cat. What makes Facebook so threatening to Snapchat is the aggressive cloning in tandem with it's pre-existing, larger network. By the time Google decided to clone Facebook, the Facebook Graph was already more powerful than the GMail graph (which is what Google Plus was built on).
- ceejayoz 9y ago> Over 1000 Googlers were cranking on Google Plus I said "great job".
- yellowbeard 9y agoDo you have a source for the size of the Google plus team?
- tomsaj 9y agoShould. Buy. GoPro.
- uptown 9y agoWhat problem would that solve for them?
- look_lookatme 9y agoSNAP may already be a Camera Company, but you can never have too much Camera Company.
- omarchowdhury 9y ago"Camera Company" built on the cameras of other companies.
- look_lookatme 9y agoYup, the future is Camera Companies all the way down.
- monkmartinez 9y agoGoPro has problems of their own. Xiaomi Yi and other sport cams from China.
- nikcub 9y agoI've been spending way too much time on the finance boards so I can't tell if this is sarcasm - because it would be in many other places
- adpirz 9y agoCurious: what / where are go-to finance boards?
- 9y ago
- cocoflunchy 9y agoUnder "costs and expenses": General and administrative Q1 2017: 1,174,476 Q1 2016: 24,011 Am I reading this right? $1.2B? Is this because of the IPO?
- cocoflunchy 9y agoAfter reading a little more I think this is stock compensation mostly.
- aub3bhat 9y agoBut! SNAP is doing AR, Spectacles are a stroke of marketing genius, distributed to cool influencers, instead of boring geeks like Google Glass or HoloLens. \s Guess you can't fool all people all the time.
- deleted 9y ago[deleted]
- Fricken 9y agoOn the earnings call they reported 5 million snaps taken using Spectacles, and $8 million in revenue from Spectacles this quarter. Maybe 55-60,000 units sold (?). That was the only thing I was curious about on the call.
- aaron-lebo 9y agoIs that a significant amount?
- Fricken 9y agoBeats me. Maybe they have a warehouse full of them they can't get rid of. Maybe they can barely keep up with demand, I don't know. They're very cheap, it's a minimum viable product, but I'm expecting some next gen product from Snap somewhere down the line that may include some sort of HUD if not full on AR, based on their patents.
- trevyn 9y ago>Maybe they can barely keep up with demand, I don't know. Definitely not that one. The Spectacles store on the Venice Beach boardwalk is always a desolate wasteland.
- Inconel 9y agoI hadn't been to the Venice boardwalk in quite some time, and I didn't even know that Snap had opened up a Spectacles store there, but when I went last month I was surprised to see that on a beautiful Saturday afternoon the only store in the entire mile plus long stretch that was completely empty aside from employees was the Spectacles store. It was actually kind of disconcerting. For anyone not familiar with the Venice boardwalk, it is jam packed with stores selling overpriced food/drinks and kitschy tourist stuff. Most of the stores are small, packed with merchandise, and overflowing with people. The Spectacles store is probably one of the larger ones square footage wise, and has very prominent frontage. I've been in the area a few times over the last month and it has always been either completely empty, or almost completely empty.
- exogeny 9y agoSo, let me get this straight: they expect to able to be a viable advertising outlet for brands, despite having no demographic targeting besides a rough guess at geolocation? Hey, cool. Good thing you're paying Google and Amazon about $200 million a year while your user growth plateaus!
- evan_ 9y agoThey can analyze which stories you look at and subscribe to, which branded lenses/stickers you use, and I'd be surprised if they weren't using facial recognition to analyze selfies to look for age/gender/etc data
- ryanmerket 9y agoNone of which brands buy on.
- Mr24601 9y agoFacebook could monetize snap so much better.
- merb 9y agowhy is net loss tagged as "not meaningful"?
- kgwgk 9y agoThe percentage change is "not meaningful": net income increased by 2100%! (non_sequitur commented on that point a few minutes before you asked, by the way)
- harryh 9y agoAnd the change is "not meaningful" because it includes a one time charge for stock compensation issued as part of the IPO.
- kgwgk 9y agoI was going to say that it would have been not "meaningful" anyway, but I have just noticed that they report EBITDA growth. It's a bit misleading to say that EBITDA has doubled (from -$93mn to -$188mn). This is why growth is usually not calculated when the baseline is negative. Going from losses to profits implies growth "lower" than -100%, for example.
- imdisappoint 9y agoTech companies, and startups in particular, are touted as the powerhouses of American innovation and economy. And yet, it seems that the past 5 years of economic activity have been illusory. I expect a similar fate of Uber and Airbnb. Once the dust settles only the staid big co's shall remain.
- chronic940 9y agoDo you still take an Uber to the airport?
- exogeny 9y agoI bet he does, because Uber subsidizes over 50% of the ride. If they didn't, no one would take Uber. It's not difficult to know how that particular story is going to end.
- jensvdh 9y agoWhat about Airbnb?
- ithinkinstereo 9y agoI travel frequently, for both business and pleasure. Over 120K miles flown last year; 100+ nights away from home. I've basically stopped using AirBnB entirely unless there is a 2x difference in price between a comparable hotel. AirBnB is suffering the same product issues as Uber. Most of the listings now are from professional hosts with multiple properties. This is especially true in "hot" cities. As a result, quality of rentals have really declined from a few years ago, and anecdotally, the prices have also gone up - with all the various fees, it's really not that much cheaper than a hotel. And worse than a hotel, you have little to no recourse when something goes sideways.
- imdisappoint 9y agoI take Uber or Lyft, whichever is cheapest. The ride "sharing" industry is a brilliant innovation, but I seriously doubt it can support Uber's valuation.
- themgt 9y agoI almost wonder if there's going to be a "liked it before it was cool" paradox to a lot of these social sharing startups dreams of continued user growth and eventual profitability. Facebook seems to have reached escape velocity as a quasi public utility, a ubiquitous enough communication medium that almost everyone is peer pressured into using it even though they increasing dislike it. But the other social sharing platforms then become escape hatches for the cool kids to hang out and share stuff in more authentic/novel/exclusive communities, fueling a few to rocket growth and unicorn valuations. But like that indie band you discovered that's now playing on the radio every damn day, the bigger it gets the more the early adopters will move on to something else. And especially in a situation where your primary market is teenagers, there's nothing less cool than what was cool 5 years ago.
- draw_down 9y agoFB and Twitter have those dynamics more than Snapchat does. You can't really "see" who else is on it unless you go looking for that. On FB and Twitter, stuff from people you don't follow or know is shown to you. Basically there isn't a "feed" in the same way.
- ctw 9y agoI get your point but that seems like a bad example to me. If the startup is the local indie band that makes it big then yeah, maybe they lose the trendy first users, but presumably they "made it" and are far more profitable by staying on the radio, even if they lose the few original fans.
- guelo 9y agoIt cost them $2.3 billion to generate $149 million in revenue. Wow.
- roschdal 9y agoThe bubble is bursting.
- acchow 9y agoLots of tech companies are making serious money.
- nemo44x 9y agoThe SNAP bubble or tech or equities in general? Many tech companies are posting growth inline with guidance and performing quite well. Many publicly listed companies are performing quite well in terms of projections. Condemning an entire sector because a single company shit the bed in their first earnings call is a bit much. Consider that even after this huge drop they are still at their IPO price. Not that I'm a buyer of this company (I don't understand them - doesn't mean they are bad but just that I don't understand them enough to invest directly in them) but it isn't a disaster. I've seen bubbles burst. You'll know it. This isn't it. This is a correction.
- seattle_spring 9y ago> The bubble is bursting. This has got to be the laziest trope that gets brought out every time a tech company loses some money.
- theprop 9y agoThis is one of the ugliest financial statements I've ever seen. The multi-billion dollar loss is due mostly to stock compensation, but still their COGS or cost of revenues sold was greater than their revenues. That's probably the first time that's been seen for a sizable software company in the history of the industry. They said their revenue per DAU is $.90 and their server costs per DAU were $.60...so that means server costs were around $100mn while total COGS were $160 mn. So what was that other $60 mn spent on? Admins? But I thought they used the Google App Engine infrastructure to avoid any server admins and such. Their revenues are exploding with their revenue up nearly 400% from last year, but were below estimates as was user growth which are probably causing the current stock price drop.
- trevyn 9y agoDoes this include Spectacles? They may be losing money per unit there.
- us0r 9y ago"server costs" (Google Cloud) is an affordable $450 million per year commitment. They apparently have 2,360 employees doing who knows what (not growing the user base). My favorite part: "Spiegel laughed out loud when asked if he was worried about Facebook copying his features. “Just because Yahoo has a search box doesn’t mean they’re Google."" We'll check back in a year to see if he feels the same way.
- zilian 9y agoSnapchat will quickly learn than obfuscating growing losses with "Not Meaningful" is swiftly punished by investors... I know it's not the main reason for the -23% in premarket, but it show a certain culture and disdain for shareholders, in my opinion.
- deleted 9y ago[deleted]
- jeffchien 9y agoI wonder if they're hobbling their user growth by not having some alternative lite app. I've come to associate their app with poor performance and battery drain while Facebook apps are relatively fine, perhaps with the exception of Messenger which they're slowly releasing Messenger Lite as an alternative.
- kevindqc 9y agoOh, since when has Facebook apps been better? I uninstalled them when I saw how much battery they were using without me even opening them.
- jeffchien 9y agoHmm, that isn't the first time I've heard of that, but the Facebook app only constitutes about 3% battery usage for me. Either way for Facebook and Instagram you can just use the mobile web versions, but Snapchat doesn't have such an official site.
- peacetreefrog 9y agoIt still seems overvalued. What would you rather own? Snapchat -- which, after dropping 23% today has a market cap of 21.5B. Or ALL of... Yelp - 2.21B GoPro - 1.21B FitBit - 1.38B Groupon - 2.01B Twitter - 13.59B Sonic - 1.27B ...for a total of 21.67B
- slackoverflower 9y agoI would most certainly buy $SNAP over every one of these companies. People don't get it. For everyone between the ages of 13 to 26, Snapchat is their only social network, their only messaging app, their go to camera! That is inherently more value that any of those companies combined.
- trevyn 9y agoI don't believe you're correct. I don't know about the lower end of that range, but in the US, the higher end of that range uses Instagram and iMessage heavily as well.
- QML 9y agoCan't tell if sarcasm -- Snapchat is not the only social network that people from ages 13 to 26 use. Out of all the apps I deleted to study for finals, Facebook's Messenger was not included.
- vassilyk 9y agoThen, they will try to - let's say - organize an event and will realise Facebook might not be fun, but damn useful to do this kind of stuff. Snapchat is not a social network, it's just a camera app. It's just a feature easily cloned by Facebook, and Facebook will end up winning just because of the network effect they can count on globally, and across nearly all demographics. Don't buy.
- nojvek 9y agoFacebook is big, it's everywhere. That's not cool for teens. Being different is what teens want. This can backfire on snap too if there is something even "cooler". I will definitely buy some SNAP after they employees sell like crazy in desperation. I am optimistic about future value of SNAP and pessimistic about Facebook
- anujbatra 9y agoCash and equivalents went up by $1.3Billion - they're just stocking money in a cookie jar and declaring it as a loss? Great company for stock owners!
- narrowrail 9y agoWhat do you think a public offering is for if not to raise cash? It's not like they are giving it back as a dividend, so I'm not sure what the "stock owners" are getting that is great? If the company grows, shareholders might reap some rewards. Because it is a gamble, shouldn't the shareholders profit from their belief in the company whereas most comments here decry Snap as worthless? Please pick a side.
- deleted 9y ago[deleted]
- ChuckMcM 9y ago[Net Loss] primarily due to the recognition of expense related to RSUs with a performance condition satisfied on the effectiveness of the registration statement for our initial public offering. This reads like they gave out $2 BILLION in RSU's that vested if the company went public. That is a pretty sweet payday. EDIT: It is a sweet payday unless you can't sell the stock to pay the taxes owed right away. Then if SNAP tanks you have a HUGE tax bill and no way to pay it.
- seattle_spring 9y agoNot only can you, the company is required to do it for you. These aren't stock options.
- cynicalkane 9y agoSnapchat was known for its unusual RSUs--they would evaporate in a set amount of time unless a liquidity event happened. Apparently, if there's what the IRS considers a substantial risk of loss, they're considered unvested and you don't have to pay taxes on them. It looks to me like the situation worked the same on the accounting side of things.
- ChuckMcM 9y agoOk, so that would confirm the 'creative use of tax law' feature which was also part of the dot com world. Thanks for that.
- WikipediasBad 9y agoCan you go into more detail on this, or just provide a link/documentation so I can also look into it for our own startup? Sounds very cool/interesting.
- beefsack 9y agoFor those who don't realise immediately, Snap Inc. do Snapchat.
- code4tee 9y agoThey lost $2.2billion on revenue of $150 million. Ouch (and yes those RSUs very much count). Even on an EBITDA basis they lost more than they had in revenue. They've got to turn the ship around. With user growth rather anemic they're not going to easily "grow" their way to profitability. They need to sort the fundamentals of the company to get the costs in check. Problem is even if they had 50% margin today they'd be valued at a very rich valuation. Long story short there's not much in the fundamentals other than pure hype holding up the value of the stock at this point.
- some1else 9y ago"User profiles with persistent content, what's the point of that anyway," said Snapchat. "Oh look, our users are ephemeral too."
- aschwabe 9y ago"Hosting costs per DAU were $0.60 in Q1 2017" This figure represents pure lunacy in the infrastructure department. Nobody leading this team cares about cost.
- boobsbr 9y agoCare to explain?
- bfrog 9y agoWow, company makes an app and is valued at 1/5th the value of GE, an international conglomerate making an enormous range of products. Seems wildly over valued to me still. Compare to yelp even at a market cap of ~2b vs this 21b mkt cap behemoth. Yeah, time to short some Snap.
- sinatra 9y agoCan you not discount a lot of companies like this? Google makes a web page (after all, that's where most of their revenue comes from), Apple makes just a phone (that's where most of their revenue comes from), etc and they are many times bigger than any conglomerate.
- pwthornton 9y agoPeople keep mentioning that Facebook is taking their (few) features, but it's more than that. Snapchat has always had garbage UX, and for awhile people tried to claim this was a feature because it kept the olds off of Snapchat. But Facebook takes user experience very seriously (hence why it is so huge), and even though Facebook does so many more things than Snapchat, it's easy to use. My retirement-age Mom uses Facebook just about daily. I'm an older millennial (who builds software UIs), and I find Snapchat baffling to use. It's such a bad UX that I can't bring myself to want to use it. Facebook is crushing Snapchat because it's more than just features that keep users coming back on a daily basis.
- pm90 9y agoNah, their UX is fine. You and I (and your grandmother, incidentally) are not the target demographic. BTW is the UX really that confusing? Sure its not 100% intuitive but after playing around with it I was able to operate it fine.
- pwthornton 9y agoI'm am an (older) millennial, so I should be in their target demo, and I lead a UX team that builds enterprise SaaS products. I also head up our user research efforts that include user testing. I'm saying that in my professional opinion, Snapchat's user experience is not good. And if you guys want to start a Go Fund Me over this, I'll bring in real users and run tests on it. Maybe I'm wrong, but that's my working hypothesis. If someone may age is already out of the core demo, how did Snap have that valuation? Teens and college kids are just not that valuable of a market.
- sidcool 9y agoThis puts me in awe of how Facebook/Instagram have been achieving such phenomenal growth year after year.
- jondubois 9y agoAmazing how you can have a $2 billion loss which represents a 2000% growth year-on-year and which is 15 times higher than the revenue and yet you label it as NM (Not Meaningful).
- timwaagh 9y agoreally a net loss of two million on a revenue of 167000. that revenue is way too low for a company with global reach. a single person can make that much. my 'revenue' was 40k ish but at least i'm making a profit. so i'd be a better 'investment' than snapchat. sorry investors, currently not raising capital. literally anybody can do better than this. they will go the way of the dodo pretty soon. ah ok...just saw that. dollars in thousands. that's slightly better but not really. my rating for this stock remains 'dodo'.
- CodeSheikh 9y agoPlenty of Snapchat users (the ones who created the hype) are no longer teenagers. They are moving away from Snapchat to more concrete (perceived adult-ish) platforms like Instagram or not use them at all. Snapchat failed to evolve their product. I mean seriously do we really need those creepy glasses to record whomever you want?
- CodeSheikh 9y agoWhere's Zynga hanging out these days?