Snap Inc plans to revamp its messaging app Snapchat following the announcement of $443 million losses for the latest quarter.
The company reported revenue of $182 million for the third quarter. It also admitted that the profit loss was due to a drop in advertising prices as well as excess Spectacles inventory.
Whilst overall the revenue represents an increase of 153% compared to the previous year, Snap Inc’s losses back then were significantly lower at $116 million.
The latest announcement reflects an almost similar number of losses as Snap Inc reported back in Q2 ($443 million).
During the firm’s earnings call, CFO of Snap Inc., Drew Vollero said that the company had clearly misjudged demand for its Spectacles and was now sitting on excess inventory.
“As a result, we recorded a $39.9m non-recurring expense primarily related to excess inventory and purchase commitment cancellations. Moving forward, we will continue to be in the marketplace with Spectacles and expect modest revenue from the product line.”
Although daily active users reached 173 million, up 21% the year over and 4% quarter on quarter, Snap is finding it tough to monetize its users.
“We are currently redesigning our application to make it easier to use,” said Evan Spiegel, CEO of Snap Inc. “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 behaviour of our community will change when they begin to use our updated application. We’re willing to take that risk for what we believe are substantial long-term benefits to our business.”