The company’s daily user base grew only 5% from previous quarter
Posting its first quarterly earnings since going public, Snap Inc. reported that its daily active user base grew to 166 million in Q1. That’s an increase of 36% over year-ago levels but only a 5% gain from the previous quarter.
Snap defines a daily active user (DAU) as a registered Snapchat user who opens the app at least once during a defined 24-hour period.
In North America, Snap said it added 3 million daily users in Q1, reaching 71 million DAUs.
The slowing rate of growth is not surprising for the US market, given Snapchat’s huge popularity among its core group of young users. eMarketer estimates that 83.4% of 12- to 17-year-olds, and 78.6% of 18- to 24-year-olds, use the app at least once per month. There is not a lot of room for growth at those penetration levels. Indeed, eMarketer projects that most of Snapchat’s usage gains in the US going forward will come from older users.
In Europe, the company also added 3 million daily users, hitting 55 million DAUs in that region in the first quarter. But in the rest of the world, Snap only added a million daily users, reaching 40 million daily active users.
According to Snap CEO Evan Spiegel, connectivity issues, as well as low bandwidth in developing markets, are holding back uptake in many international markets.
“The connectivity issue is a real problem in the developing world—it changes the use case of how people use Snapchat,” said Spiegel.
When asked if Facebook—and the fact that the social networking giant copied Snapchat’s key feature—scares the company, Spiegel noted that copying is commonplace in Silicon Valley.
“If you want to be a creative company, you have to be comfortable with the fact that people will copy your stuff,” he said. “Everyone will develop a camera strategy. Just because Yahoo has a search box, it doesn’t mean they’re Google.”