Snap Inc. (SNAP) may call itself a camera company, but it's not selling a lot of its Spectacles.
You know, the camera-equipped glasses that seemed like it had the potential to make wearables cool again, while changing the way users record video on Snapchat. Spectacles were announced last September to great fanfare and via some quirky, yellow vending machines that popped up randomly around the country. The releases would draw big crowds that, in some cases, waited in line for as long as six hours to get their hands on a pair.
But that excitement seems to have died down, per some new sales data included in Snap's second-quarter earnings report. Snap CFO Drew Vollero noted on Thursday that the company's other revenues came in at $5.4 million, of which a "substantial amount" was driven by Spectacles. At $130 a piece, that means Snap sold about 41,500 pairs of Spectacles, which would be a 35% decline quarter-over-quarter. Snap brought in $8.3 million from Spectacles during the prior period.
Snap sold Spectacles via these yellow Snapbot vending machines.
Shares of Snap were slumped 15% to $11.58 in pre-market trading on Friday on the back of its disappointing second-quarter results.
That's particularly bad news given that Snap started making it easier for consumers to find Spectacles. In February, the company made the glasses available for purchase on its website, after months of them only being available via pop-up locations. And last month, Snap began selling them on Amazon.com Inc. (AMZN) , where they're eligible for Prime shipping. Snap also started selling Spectacles in Europe in June.
The added availability on Amazon might not show up until Snap's third-quarter results, according to TechCrunch, but the expansion in the U.S. and Europe should have been reflected in this quarter's sales.
Snap sold ~40,000 Spectacles last quarter.
That's flop territory, especially considering the product doubles as a pair of sunglasses.— Neil Cybart (@neilcybart) August 10, 2017
While Snap has honed in on the fact that it's a camera company, it's worth noting that very few people ever expected Spectacles to become a big source of revenue. Snap noted as much in its S-1 prospectus, saying that Spectacles "have not generated significant revenue for us."
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Still, it seems that analysts and investors have hopes that Snap may do something more with Spectacles in the future. Where others, such as Alphabet Inc.'s GOOGL Google Glass, have failed at introducing smart eyeglasses to consumers, Snap has succeeded. Through crafty marketing and a simple design, Snap has been able to get AR-powered glasses in the hands of a sizable number of consumers. Spectacles have several existing AR capabilities, like layering interactive graphics over real world video, that could make it an easy platform to build upon in the future.
Plus, Snap has shown through patents and acquisitions that it has more AR ambitions. One of its latest products, World Lenses, which was released in April, even brought AR capabilities beyond selfies and into real-world environments.
So Spectacles may never be a big cash cow for Snap, but if the AR market proves to be worth as much as $100 billion in the next several years, the company could benefit from paying more attention to how its Spectacles are selling.
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