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August 9, 2018

Snapchat redesign woes drop user count by three million, but retention grows

by John_A

Proof of the disruption that Snap Inc. predicted would come with a redesign of the Snapchat app is here — Snapchat’s user base fell by three million daily active users in the second quarter. The company shared the latest financial results on August 7, and while revenue grew, the camera-focused social network lost users.

Snap CEO Evan Spiegel says the change is largely from the predicted disruption after the redesign, with some users typically counted among the daily users opening the app less frequently, a statement that jives with the increase in monthly active users. The numbers fell around two percent from the previous quarter, from 191 million to 188 million. Compared to the same time in 2017, however, Snapchat is ahead by eight percent from the 173 million daily users reported last summer. The number of daily users in North America fell by one million from the first part of the year.

“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,” Spiegel said during the earnings call. “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.”

Despite the loss in daily users, the redesign has a few high points that arose from separating brands from friends. The number of users watching Stories from Publishers, including Snapchat Shows, has grown by 15 percent, with last month bringing the most views for brand Stories in the app’s history.

While the number of users opening Snapchat daily has fallen, the average time spent on the platform stayed above 30 minutes. Retention for users who are over 35 has increased by eight percent, one of the goals for the redesign.

Snap is also continuing the process of completely rewriting the Android app in a way that makes the app easier to update in the future. The rewritten Android app is already in beta testing, Speigel says, and shows speed improvements for opening the app and taking a Snap over the current version.

While the company’s user count was less than stellar, the company’s revenue jumped 44 percent from the same time in 2017 and by 14 percent from the first quarter. Growth in advertising has allowed the company to charge less for the ads while increasing ad revenue.

The financials were better than Wall Street predicted and were followed by a $250 million investment by Saudi Prince Alwaleed bin Talal for a 2.3 percent stake in the company. While the earnings report is a positive one among the company’s struggles after going public, a report from Bloomberg suggests the company isn’t “out of the woods.”

In between announcing the redesign and actually rolling out the new app, Snap saw a five percent increase in daily active users at the end of 2017. Those numbers dropped to two-percent growth as the update rolled out, ahead of the user loss announced on Tuesday.

“With the updated redesign, we’ve been able to combine the strength of our close-friend network that brings people to Snapchat every day with an infinite scroll of personalized content,” Spiegel said. “We’re working hard to expand the long-tail of our content offering and we are making steady progress on improving personalization. Despite our DAU results this quarter, we believe that this is an important evolution of our product that will help drive future growth in engagement.”

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