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SNAP Plummets To New Record Low After Missing Everything, Burns Through A Quarter Billion

It's easy to summarize the just reported SNAP Q2 earnings report with just one word: disaster.

The company missed expectations on everything: from revenue, to earnings to average daily user, but at least it burned a boat load of cash doing it: a quarter billion dollars, or $228 million.

The details:

  • Q2 revenue $181.7 million, exp. 185.8 million
  • Q2 EPS loss of 16 cents, exp. loss 15 cents
  • Q2 Daily Active Users 173 million, Exp. 175 million.
  • Q2 ARPU $1.97, 10% below estimates

Of course, the company tried to spin the results favorably, as follows:

  • Daily active users (DAU) – DAUs grew from 143 million in Q2 2016 to 173 million in Q2 2017, an increase of 30.5 million or 21% year-over-year. DAUs increased 7.3 million or 4% quarter-over-quarter, from 166 million in Q1 2017.
  • Average revenue per user (ARPU) – ARPU was $1.05 in Q2 2017, an increase of 109% over Q2 2016 when ARPU was $0.50. ARPU increased 16% over Q1 2017 when ARPU was $0.90.
  • Hosting costs per DAU – Hosting costs per DAU were $0.61 in Q2 2017, as compared to $0.55 in Q2 2016 and $0.60 in Q1 2017.
  • Capital expenditures – Capital expenditures were $19.4 million in Q2 2017, as compared to $16.4 million in Q2 2016 and $18.0 million in Q1 2017

But the one number that should matter the most - unless SNAP somehow pivots into a cash burning juggernaut which, like some other companies that shall remain nameless, surges the more cash it burns - was its Cash Burn which surged from 150MM a year ago to 229 million, will push its stock even lower in the coming weeks and months.

And then there is the lock up, which releases more shareholders to sell on Monday, which in light of these results, they will.

Below are the key highlights in chart format.

The results:

Daily users:

ARPU

Free Cash Flow, or lack thereof:

Predictably, the stocks has just crashed to new all time lows below 11.91.