Snap Inc., the company behind the Snapchat app and a failed line of wearable cameras, is slightly less fucked than it was before, according to Q4 2018 earnings released on Tuesday.
Per CBS News, Snap’s posting shows that it lost a staggering £148 million, less than the £270 million it lost in Q4 2017 but still a lot. However, it still set a record revenue of £300 million for the quarter – and it’s stopped shedding Snapchat users, reporting it was holding steady at 186 million daily active users.
CBS wrote that the Q4 report is a nice little boost for the company, which has been in a tailspin for quite some time as Facebook-owned Instagram continues to surge (and steal all of Snapchat’s best features):
The results topped analyst forecasts, and Snap shares jumped more than 17 percent in after-hours trading.
The stronger report offers a much needed boost for Snap, which along with poor financial results has faced management turmoil. Most recently, Tim Stone, the high-powered former Amazon executive who took over as chief financial officer last May, departed suddenly after reportedly going behind Evan Spiegel’s back to ask the board for a raise in pay.
But this is mostly a good Q4 for Snap in the context of an awful 2018 that peaked at 191 million daily active Snapchat users in Q1 before plummeting past its Q4 2017 tally of 187 million. Per Business Insider, Snap had a negative free cash flow for the year of £624 million, down only slightly from its £632 million negative free cash flow in 2017.
“The company ended the year with $1.3 billion [£1bn] in cash and marketable securities, down from more than $2 billion [£1.5bn] a year earlier,” Business Insider wrote.
Still, the Q4 earnings do not rule out Snap reaching profitability before it burns through its remaining cash pile and is forced to take in more investment or be acquired, TechCrunch wrote, though any such positive outcome would be a squeaker. Snap is reaching 70 percent of total US 13 to 34 year olds with premium mobile video, and has grown the audience for its Discover section’s Publisher Stories and Shows by 30 percent, the site added.
Since Snap gained users on iOS, that means it is still shedding users on Android. Recode reported CEO Evan Spiegel told analysts on Tuesday that a forthcoming rebuild of its Android app, apparently intended in part to make the app work better on “lower-end” phones, is now the company’s highest priority. However, the new Android app has been in the works since 2017.
Snap stock shot to $7.02 (£5.41) a share on Tuesday at close, according to Business Insider, but during after-hours trading was in the $8.60 (£6.63) range. That’s still far below its $17 (£13) initial public offering price, but it’s something.
However, the company could face new challenges in 2019, mainly coming from its behemoth rival Facebook. TechCrunch recently reported that Instagram appears to be beefing up its account linking in a manner that could possibly make it a successor to Facebook Login. The New York Times reported in January 2019 that Facebook itself is planning to merge it and Instagram’s messaging backend with WhatsApp, part of an effort to “increase Facebook’s utility and keep users highly engaged inside the company’s ecosystem” as well as “reduce people’s appetite for rival messaging services.” [CBS News]
Featured image: Richard Drew (AP)