(Reuters) – Snap Inc lost more users than Wall Street expected in the third quarter as it continued to grapple with an unpopular redesign of its Snapchat photo-messaging app and fierce competition from Facebook Inc’s Instagram.
Daily active users are expected to fall again next quarter, Snap Chief Financial Officer Tim Stone told analysts on a conference call, which would mark the third sequential quarter of user declines.
Snap shares, which have lost more than 52 percent since the beginning of the year, tumbled 10 percent in after-hours trade as the company failed to convince Wall Street 2019 would be better.
During the call, Stone dashed hopes that Snap had set a firm target to reach full-year profitability in 2019. That ambition was outlined in a leaked internal memo from Chief Executive Evan Spiegel earlier this month.
“Bear in mind that an internal stretch goal is not a forecast and is not guidance,” Stone said.
The number of daily active users on Snapchat fell to 186 million in the quarter ended Sept. 30, from 188 million three months earlier. Daily active users numbered 178 million in the prior-year quarter.
Spiegel said the company planned to add users by going after older users in the United States and Europe and expanding internationally to reach 13 to 34-year olds, the app’s core demographic.
But one of Snap’s biggest problems is it “has an unclear vision on how to break out beyond the under-30 demographic in a very crowded social media landscape,” said Jessica Liu, an analyst at Forrester.
The latest users figure, widely watched by investors and advertisers, also fell short of analysts’ average estimate of 187.56 million, according to Refinitiv data.
Wall Street had been expecting Snapchat’s users to rise to 192.84 million next quarter.
The redesigned Snapchat app aimed at creating a more personalized service has struggled to attract more users since its roll-out last year and newer versions have been criticized for being too confusing to use.
The number of advertisers active on Snapchat remains small compared with Facebook and Instagram but is steadily growing, analysts at Stifel said on Wednesday, citing data from Merkle.
Still, the company topped analysts’ revenue expectations and average revenue per user jumped. Revenue growth was helped by increased adoption of the company’s programmatic ad sales platform, Snap Chief Executive Evan Spiegel said in prepared remarks.
Snap’s overall revenue jumped about 43 percent to $297.7 million, topping Wall Street expectations of $283.2 million.
Average revenue per user increased to $1.60 during the third quarter, from $1.17 a year earlier, helped by growth outside North America.
Net loss narrowed to $325.1 million or 25 cents per share, from $443.2 million or 36 cents per share, a year earlier. On an adjusted basis, Snap lost 12 cents per share, while analysts were expecting a loss of 14 cents per share.
Snap also said it expects fourth-quarter revenue of between $355 million and $380 million. Analysts were expecting revenue of $371 million.
Earlier this month, Snap announced new scripted shows for Snapchat to attract users and increase the amount of time they spend on the app. Snap said the serialized episodes will be ad-supported and fast-paced for mobile viewing.
Snap said Wednesday it hired Jeremi Gorman, Amazon’s head of global advertising sales, as its chief business officer. It also hired Jared Grusd as chief strategy officer. Grusd was CEO of media site HuffPost.
