Snapchat Loses 2 Million Daily Active Users

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Snap CEO Evan Spiegel

The company grew revenue by 43 percent to around $298 million during the third quarter.

Snapchat's user base is still getting smaller. 

The app's parent company on Thursday revealed that it had 186 million daily active users for the third quarter of the year, down 1 percent from the from the previous quarter when it reported that it had 188 million daily active users.

In his prepared remarks, Snap CEO Evan Spiegel attributed the decline to Android phone users and said that the company is working on a new version of the app for that platform. "The Android community represents a global growth opportunity for us, and we are making good progress testing the application in select markets," he said.

While the company does not provide specific guidance around user growth in the coming quarters, Spiegel also noted that DAUs are expected to continue to decline sequentially during the fourth quarter of 2018. 

Despite having fewer people on the app, Snapchat has gotten better at monetizing its audience. Revenue for the period grew 43 percent to just shy of $298 million, more than the $283 million that Wall Street was expecting. The company also reported an adjusted loss of 12 cents per share, less than the 14 cents per share expected. 

Earlier this year, Snap introduced a redesign for Snapchat that frustrated many users. The changes were designed to make the separation between messaging and published content. Spiegel noted that since the redesign, more people are watching premium content on Snapchat. Earlier this month, the company also introduced a slate of new scripted series, including a college comedy from Mark and Jay Duplass' DBP Donut called Co-Ed, that are designed to keep users engaged and coming back for more. Investors won't know whether those shows can help boost the Snapchat user base until the end of the fourth quarter. 

Amid these challenges, the company has lost several top executives, including chief strategy officer Imran Khan, who was instrumental in leading the company through its initial public offering in spring 2017. On Wednesday, Snap announced that it had hired former Amazon sales executive Jeremi Gorman as chief business officer and former HuffPost CEO Jared Grusd as chief strategy officer. 

Investors were impressed with the beat, immediately sending the company's stock up more than 6 percent during after-hours trading. But eventually shares were trading down nearly 2 percent. Snap shares closed the day up more than 6 percent, or 42 cents, to $7.01.