Snap Inc. (SNAP) - Get Report shares were indicated higher in pre-market trading Wednesday after the instant messaging service posted stronger-than-expected second quarter revenues that offset the group's first decline in users following the controversial resign of its signature Snapchat app.
Snap said global revenue for the three months ending in June came in at $262 million, topping the consensus forecast of $250 million and rising 44% from the same period last year as the average revenue per user jumped 33.3% to $1.40. Snap also said it sees third quarter sales in the region of $265 million to $295 million even as it admitted Daily Snapchat users fell 1.6% to 188 million over the second quarter.
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"This was primarily driven by a slightly lower frequency of use among our user base due to the disruption caused by our redesign," CEO Evan Spiegel told investors on a conference call late Tuesday. "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."
"We feel that we have now addressed the biggest frustrations we've heard and are eager to make more progress on the tremendous opportunity we now have to show more of the right content to the right people," he added.
Snap shares were marked 1.07% higher in pre-market trading in New York, indicating an opening bell price of $13.26 each, a move that would trim the stock's year-to-date decline to around 9.25%.
Snap shares were also supported by news that Saudi Arabia's Prince Alwaleed bin Talal, the billionaire investor who holds stakes in Citigroup (C) - Get Report and 21s Century Fox (FOXA) - Get Report , had built a $250 million holding in Snap at a price of $11 a share.
Asked what Snap needs to do to reignite user growth, Spiegel responded by noting Snapchat's MAU count of over 100 million and said: "What we're seeing on the engagement side, over 30 minutes a day, is a significant opportunity for us." (Spiegel didn't spell out what that opportunity was.)
As for Snap's relationship with advertisers -- a subject of concern for investors, owing to reports that advertisers prefer Facebook's Instagram (FB) - Get Report -- chief strategy officer Imran Khan did most of the talking, noting that its most-engaged advertisers increased their spending on Snap's ad tools during the quarter.
"The advertisers who stayed with us have been very, very engaged and increased their budgets with us...I couldn't be more happy with it," Khan said.