"Snap delivered a massive miss across the board which will further ignite fears that this company has major challenges ahead with its app redesign and business model in limbo", Daniel Ives, an analyst with GBH Insights, told investors in a note immediately after Snap posted results.
A logo of Snap is displayed on a monitor above the floor of the New York Stock Exchange shortly after the opening bell in New York, U.S., December 5, 2017.
The number of daily active users, crucial for generating advertising revenue, rose to 191 million in the quarter ended March 31, short of consensus expectations of 194.15 million, according to Thomson Reuters I/B/E/S. Snap said the redesign impacted its revenue by "disrupting user behavior" and creating some apprehension among its advertisers.
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And things won't exactly look up in Q2: Snap noted that year-over-year revenue growth rate would "decelerate substantially" next quarter. At the time, Citi analysts also said the redesign was not popular with many of Snapchat's users or with influencers.
"We are now focused on optimizing the redesign based on our ongoing experimentation", CEO Evan Spiegel said in a statement.
Despite poor sales, last month Snapchat confirmed a second generation of Spectacles were on the way, with a slimmer design and new ability to take still pictures as well as capture video.