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Snap CEO Evan Spiegel
- The number of Daily Active Users of Snap's Snapchat app was up only 2% in the first quarter from the fourth quarter.
- That's a much slower growth rate than Snap posted in the fourth quarter. If its growth had continued, it would have added 9 million users, instead of the 4 million that it did.
- Snap places much of the blame for the slowdown on the controversial Snapchat app redesign that launched earlier this year. Now, the company promises tweaks to the design are coming.
- Worse than all of that, though, it ended the quarter with fewer daily users than it had on average for the period.
The Snapchat app redesign not only was a critical flop, it now seems to be costing the company users.
The number of daily active users (DAU) of Snapchat barely budged in the first quarter from the holiday period. Worse, DAUs fell toward the end of the period; at the end of March, there were fewer people using Snapchat on a daily basis than for the quarter as a whole.
In a statement, company CEO Evan Spiegel attributed comapny's problems in building its user base to the February redesign, which moved certain features around and changed the ordering of posts.
"A change this big to existing behavior comes with some disruption," Spiegel said on a conference call with investors and analysts in which he discussed the company's disappointing quarterly report. He also said that the company will be tweaking the design to find a compromise that users will be happier with.
On average, Snapchat had 191 million DAUs in the first quarter, up just 4 million, or 2%, from 187 million in the fourth quarter. That growth rate was less than half of what the company posted in the holiday period, when its DAUs grew by 8.9 million from the third quarter, or a 5% clip.
Had Snapchat continued growing at the rate it posted in the holiday period, it would have added more than 9 million users in the first quarter, instead of just 4 million. So, the redesign likely cost it millions of users - even before the March fall-off. The 2% growth sequential growth rate was the slowest Snap has posted since it became a public company a year ago.
But things were even worse at the end of the quarter. In March, Snapchat's DAUs were between 187 million and 191 million, company officials said. But they declined to say exactly how many users the app had that month or whether that number was below what the app saw in December, the end of the previous quarter.
Users have responded largely negatively to the redesign, but the changes are having a particular effect on usage of the Android version of its app, company officials said. That version is based on older code that tends to break whenever it is modified, Spiegel said on the call. The company is in the process of rebuilding the app from the ground-up, he said.
"We still have a lot of work to do to optimize the new design, especially for our Android users," Spiegel said.
Snap reported its user totals as part of its quarterly report. The company's revenue for the period fell well shy of expectations, which sent its stock plummeting over 15% in after-hours trading.
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