Snap's stock crashes 10% after announcing it lost 2 million users last quarter — even though it beat on the top and bottom line

Greg Sandoval/Business InsiderEvan Spiegel, Snap cofounder and CEO, speaks at the 2018 Code conference.

Snapchat is shrinking, and its stock is crashing.

On Thursday, Snap, the messaging app’s parent company, announced its financial results for the third quarter of 2018. Its revenues were better than Wall Street was hoping for, and its losses were similarly lower than expected – but the data confirmed Snapchat’s userbase is continuing to shrink.

It lost two million daily active users over the last quarter, a 1% drop-off, down from 188 million in Q2. That was also down from its Q1 high of 191 million. Looking forward, Snap says it expects its DAUs to decline further in Q4.

Wall Street initially responded to Snap’s beat on the top and bottom line with glee, and its stock spiked more than 9%. But it quickly slumped back into the red, crashing 10% from market close as of writing.

That revenue is growing and losses are shrinking, even in spite of its eroding userbase, is something of a bright spot for the company. It indicates that it is able to monetise its existing users to a greater and greater extent, even as it struggles to attract new ones.

Here are the key numbers:

  • $US297.7 million revenue (versus $US283.36 million expected)
  • $-0.12 adjusted EPS (versus $-0.14 expected)
  • 186 million daily active users (versus 186.8 million expected), down 1%

The company has been struggling in recent months, as it comes under sustained pressure from Facebook and sister app Instagram, and its userbase flat lines following a controversial redesign.

On an earnings call with analysts on Thursday, CEO Evan Spiegel said that much of the user loss had come from Android, and touted the company’s long-awaited new Android app as a likely driver for future user growth.

Read Thursday’s big group of tech company Q3 earnings reports:

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