Snap Inc Earnings: $2.2 Billion In Net Losses… Stock Tanks

Snap Inc Earnings: $2.2 Billion In Net Losses… Stock Tanks

Snap released its first earnings report as a public company after closing bell tonight, posting losses of $2.31 per share on $149.6 million in revenue. Analysts had been estimating $158.3 million in revenue and losses of 21 cents per share. Estimates for Snap’s first public earnings report were quite wide, with the estimates ranging from $130 million to $195.6 million in revenue and

In the year-ago quarter, the Snapchat parent reported $38.8 million in revenue and losses of 14 cents per share.

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Snap posts a huge net loss due to stock-based compensation

The company’s net losses widened to $2.2 billion, which the company said includes $2 billion in stock-based compensation expenses mostly related to the recognition of expenses related to performance-based restricted stock units. Snap reported adjusted EBITDA losses of $188.2 million, compared to the consensus of $182 million in adjusted EBITDA losses. Estimates for EBITDA losses were also wide, ranging from $251.2 million to $84.1 million.

Cost of revenue grew to $163.4 million from $75.8 million in the year-ago quarter. Snap’s capital expenditures rose to $18 million in the first quarter from $12.5 million in last year’s first quarter. The company spent $20.4 million on capital expenditures in the fourth quarter.

Snap’s user base grows

Snap said its daily active user base grew from 122 million in the first quarter of 2016 to 166 million in the most recently completed quarter, representing a 36% year over year increase. The number of daily active users grew 5% sequentially from 158 million in the fourth quarter.

Average revenue per user jumped 181% year over year to 90 cents from 32 cents in the year-ago quarter. Average revenue per user fell sequentially, however, from $1.05 in the fourth quarter. Hosting cost per daily user amounted to 60 cents in the first quarter, compared to 52 cents in the year-ago quarter and 72 cents in the fourth quarter.

User metrics has been the top concern of bears since the Snapchat parent went public earlier this year. Analysts and investors alike want to see signs that the company can keep growing and sustain the growth it manages to attract. Wall Street is especially looking for signs that Facebook’s clones will eat away at any chances Snap has for growth.

It seems that in Snap’s case anyway, losing $2 billion because of stock-based compensation is a deal-breaker no matter how many users you add. Shares of Snap stock tanked by as much as 21.54% to $18.03 in after-hours trades. For reference, the IPO price was $17, so this may be the closest we’ve gotten to that since IPO day.

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