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Can Snap Turn Things Around After Its DAU Decline?
By: Forbes
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Snap published its Q2 2018 results on Tuesday, August 7, posting a relatively mixed set of results. While the company beat market expectations on revenues and earnings, it reported its first-ever decline in the crucial daily active user metric, while forecasting slightly lower-than-expected revenues for the quarter. Below, we provide some of the key takeaways from the company’s results.

We have created an interactive dashboard analysis on what to expect from Snap in 2018. Users can modify any of our forecasts and drivers to arrive at their own valuation estimates for the company.

DAUs Slide For The First Time

Snap’s daily active user base declined from 191 million in Q1 2018 to 188 million, as the company continued to witness user attrition following its controversial redesign of the Snapchat app late last year. While Snap has been rolling out an optimized version of the app over the second quarter, with some key UI changes, it’s possible that the updates came in too late to make much of an impact on the company’s second-quarter user figures. While the company hasn’t provided specific guidance on its DAUs for Q3, it indicated that it is seeing some improvements to leading growth indicators such as new user retention. For instance, the company says that new user retention for age groups above 35 has increased more than 8% since the new redesign was launched.

ARPU Sees Improvement As Programmatic Shift Gains Traction

On the positive side, Snap made some progress with regard to its core financial metrics. The company’s overall ARPU rose from $1.21 in Q1 2018 to $1.40, and the metric was up from $1.05 during Q2 last year. The increase was driven by multiple factors, including stronger ad sales in international markets (ARPU was up by 70% year-over-year in Europe and 233% in the rest of the world segment). Snap’s bet on programmatic advertising also appears to be paying off, as the increase in ad impressions continues to offset price declines. While ad impressions were up by 191% year-over-year and 26% sequentially, pricing was down 52% year-over-year and 9% sequentially. Snap might also have scope to increase the ad load on its app, although it has indicated that its focus was on delivering relevant ads to users, as it emphasizes its user experience. Engagement rates have also remained strong, with users continuing to spend upwards of 30 minutes a day on Snapchat.



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This article originally appeared on Forbes.com. You'll find a link to the original after the post. www.forbes.com
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