Analysts were expecting revenue of $236.9 million. Something the company said will be fixed over time as more advertisers bid. Snap's revenue was up 153.1% on a year-over-year basis. equities analysts forecast that Snap will post -2.81 earnings per share for the current fiscal year.
Shares of Snap (NYSE SNAP) traded down $0.45 during midday trading on Thursday, reaching $14.83. The company had revenue of $181.70 million for the quarter, compared to analyst estimates of $186.49 million.
It's proven very hard for Snapchat to grow usage and revenues from its image-based messaging app - not least because of a huge amount of competition from the likes of Facebook and its companion apps Instagram, Messenger and WhatsApp; as well as a number of other apps. So Snapchat is being redesigned.
"We're willing to take that risk for what we believe are substantial long-term benefits to our business", said Evan Spiegel, Snapchat's chief executive.
"There is a strong likelihood that the redesign of our application will be disruptive to our business in the short term, and we don't yet know how the behavior of our community will change when they begin to use our updated application", Spiegel said on the call.
Snapchat have never felt the need to explain the app to their users, and were content to let people use it rather than talking them through the process of the app.
The $2bn (£1.5bn) stake makes Tencent one of Snap's biggest shareholders and gives it a valuable ally against Facebook, which has attempted to crush Snapchat by poaching numerous app's best features. The Company's advertising products include Snap Ads and Sponsored Creative Tools, such as Sponsored Lenses and Sponsored Geofilters.
Brian Wieser, a senior research analyst at Pivotal Research Group, said there remained reasons for optimism about Snap and he questioned Wall Street's focus on user growth.
Snap also indicated it was cutting back on Spectacles, its video recording sunglasses.
Now, the company said it's taking a $39.9 million writedown on all the inventory the company is unlikely to sell.