Snap, the parent company of Snapchat, has reported its second consecutive drop in the number of daily active users for its third quarter.
Tim Stone, the finance chief of Snap, added that the user numbers will continue to decline again next quarter, causing its share price to fall by more than eight percent in after-hours trading.
However, the loss-making social media company exceeded the expectations for the average revenue per user and overall revenue. It was aided by the increased take-up of its advertising sales programme.
According to data from Refinitiv, the number of daily active users on Snapchat, the social media platform, plunged to 186 million in the third quarter from the 188 million three months earlier, falling short of the estimates of analysts of 187.6 million. Wall Street had also been anticipating that the user numbers will increase next quarter to reach nearly 193 million.
The revenue of Snap increase by approximately 43 percent to reach $297.7 million (£261.8 million) for the quarter, beating the estimates of $283 million as collated by S&P Global Market Intelligence. The average revenue per user increased to $1.60, up from $1.17 for the same period during the previous year.
The net loss of the company narrowed by 36 percent to $325.1 million, as Evan Spiegel, the chief executive of the company, promised earlier this month to achieve profitability by mid-next year.
Nicholas Hyett, an equity analyst at Hargreaves Lansdown, stated: “Recent quarters have seen active user numbers struggle, although the financial impact of that has been minimal thanks to average revenue per user continuing to climb.”
He added: “Profitability is the big hurdle for Snap, and an internal memo from CEO Even Spiegel suggests 2019 could be the year it cracks out a little black number for the first time. Product innovation may help it get across the line, but its prime product is millennial eyeballs and those seem to be slipping away.”