Revenue Is Up, But Snapchat Redesign Has Made It Lost Millions Of Users

Snapchat is one popular multimedia messaging app. But not everything goes well in the competition.

Snap, Snapchat's parent company, said that the app lost about 3 million daily active users, most of them due to its controversial design.

This decline marks the first time ever for Snapchat to experience negative user growth since the company went public.

"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," said founder and CEO Evan Spiegel.

"One of the most important things about the redesign is that we're surfacing the right content to the right people as quickly as possible," said Spiegel, explaining that the redesign has actually increased the number of users aged 35 and older, something that company has long hoped to have.

Snapchat DAU

Snapchat's redesign was Spiegel's idea.

His hope was to invigorate the platform’s advertisers and better cater ads to users. But in the months following its unveiling, millions of Snapchat users around the world have signed a petition, begging the company to reconsider the controversial design.

Snap didn't listen. As a result, 3 million users lost is equal to 2 percent of its daily active users - from 191 million to 188 million - in just one quarter.

That’s not good because Snap’s growth momentum is its key strength. The app’s value is tied to a strong number of younger audiences who were turning away from Facebook.

To make up the loss, Spiegel said that the company's financials exceeded investors' expectations.

Revenue for the company has increased 44 percent year-over-year, up from $182 million in the second quarter of 2017 to $262 million in 2018 (analysts' expectations was at $251 million). Its stock is also up, part of which is because the increased revenue, and also after Saudi Prince Alwaleed bin Talal invested $250 million to acquire a 2.3 percent stake in the company.

As an app popular on the web, Snapchat and other social media platforms compete with one another by boasting the number of users.

With many popular Snapchat power users abandoning the app, Snapchat is losing its grip. Even Kylie Jenner, who once loved Snapchat, launched her own makeup filter on Instagram without building one for Snapchat. She was also famous for bringing down Snapchat market value by $1.3 billion with a single tweet.

Snapchat in losing 3 million in just one quarter, is nothing but bad news, especially considering how Instagram continues to soar by taking much of the social media sphere's attention.

Snap declined to estimate user growth for the next quarter, but noted that its third-quarter earnings have historically "trended down" for the company..