By Daniel J. McLaughlin
If it ain't broke, the old saying, don't fix it. Snapchat has run afoul of this adage, and they have meddled with a winning formula - and for the first time, they are starting to lose out.
The photo sharing app appeals to a younger audience, millennials and the younger Generation Z, who advertisers were salivating over the prospect of reaching them. Snap, the app's parent company, went public in March last year, and their stock was sought after - but over a year as a public company, things are not as rosy as it once was.
A disastrous redesign of Snapchat has resulted in the app losing millions of users. Snap reported that the number of people using the service on a daily basis has dropped for the first time. Over the April-to-June period, its parent company said it attracted 188 million daily active users, or two per cent, which is three million fewer than over the previous quarter.
It may have lost users, but there was a bit of good news. Snapchat has seen new user retention for people over 35 grow more than eight per cent since redesigning the app earlier this year, according to CNN.
Snap also experienced a 11 per cent bump in share price in after-hours trading after a $250 million (£193 million) investment from Saudi prince Alwaleed bin Talal. However, it ultimately closed down two per cent at $12.90.
Despite the drop in daily users, it has seen good revenue numbers. Snap managed to beat Wall Street’s expectations for both revenue and losses, the Guardian reports. It reported second quarter revenues of $262.3 million against analyst estimates of $249.8 million, an increase of 44 per cent over the same period last year. Overall, the company posted a loss of $353 million, or 27 cents a share, down from a loss of 36 cents a share a year ago.
Snap CEO Evan Spiegel has admitted that the February Snapchat redesign has resulted in a drop of users. He said in prepared remarks on an investors' call: "This was primarily driven by a slightly lower frequency of use among our user base due to the disruption caused by our redesign.
"It has been approximately six months since we broadly rolled out the redesign of our application, and we have been working hard to iterate and improve Snapchat based on the feedback from our community."