Snap adds fewer users than expected because redesign pain lasts longer

(Reuters) – At the end of September, Snap Inc had fewer active users than Wall Street expected, as an unpopular redesign of the photo messaging app in the second quarter resulted in fierce competition from Facebook's Instagram.

FILE PHOTO: The Snapchat Messaging application is seen on a phone screen Aug 3, 2017. REUTERS / Thomas White / File Photo

The owner of Snapchat said on Thursday that the number of daily active users on the app fell to 186 million in the quarter ended September 30, from 188 million three months earlier.

The number, which was widely observed by investors and advertisers, also missed the analysts' average estimate of 187.56 million, according to refining data.

Nonetheless, Snap's total revenue increased 43 percent to $ 297.7 million, exceeding Wall Street expectations of $ 283.2 million.

The redesign of Snapchat, which aims to provide users with a more personalized service, has been struggling to attract more users since its launch last year, and newer versions of the app have been criticized for being too confusing.

In the meantime, Facebook has gained more users by introducing Snapchat-like features on the photo sharing service Instagram and its other apps.

The number of active on Snapchat advertisers remains low compared to Facebook and Instagram, although the number is steadily rising, said the Stifel analysts on Wednesday, citing data from Merkle.

Snap said that average revenue per user increased to $ 1.60 in the third quarter, compared to $ 1.17 in the prior year. Compared to the previous quarter, the number increased by 14 percent.

The net loss decreased to $ 325.1 million, or 25 cents per share, from $ 443.2 million or 36 cents per share a year earlier.

Snap also said it expects sales in the fourth quarter to be between $ 355 million and $ 380 million. Analysts expected sales of $ 371 million.

Reporting by Vibhuti Sharma in Bengaluru and Sheila Dang in New York; Editing by Sai Sachin Ravikumar

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