By Alex Heath
Snap Inc. reported its first quarterly decline in daily users on Tuesday, but shares surged in after-hours trading because the company’s second quarter revenue beat estimates and it received a $250 million investment from Saudi Prince Alwaleed bin Talal.
The Snapchat app lost 3 million daily users in the second quarter after a negative reaction to the app’s redesign. CEO Evan Spiegel told investors Tuesday that the redesign was, “an important evolution of our product that will help drive future growth in engagement.”
Snap reported 188 million daily users while Wall Street was expecting 193 million. Revenue grew to $262 million, more than the expected $250 million. The company’s net loss decreased 20 percent year-over-year to $353 million. Snap’s non-advertising revenue, which includes its Spectacles camera glasses, was only $2 million for the quarter.
Shares of Snap were buoyed on Tuesday by the announcement that the Prince Alwaleed, a billionaire tech investor who has backed companies including Twitter and Lyft, purchased a 2.3 percent stake in Snap. He bought publicly traded “Class A” shares, meaning he doesn’t have a vote in company matters.
Under the guidance of the newly appointed CFO Tim Stone, Snap gave investors revenue outlook for the first time, predicting that the company will earn $265 million to $290 million in the third quarter. Stone also warned that Snap’s user growth rate could continue to fall, noting that user growth rates have “trended down both year-over-year and sequentially” in the third quarter when compared to the second.
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