Snap CEO Evan Spiegel Stands By Redesign Despite Rocky Q1 Results

Snapchat CEO Evan Spiegel

Snap shares plunged 16.5 percent to $11.77 in after-hours trading.

Snap's hotly contested redesign had a material negative impact on revenue, the company said in its Q1 earnings report.

Revenue came in at $231 million, 25 percent higher than a year ago but well below Wall Street's expectation for $244 million.

User growth at the company's disappearing-message app have repeatedly fallen short of Wall Street's expectations since its heavily hyped IPO in March previous year. Daily active users totaled 191 million, also short of the 194.2 million predicted by FactSet.

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The Venice, California-based firm posted a net loss of $385.8 million, or 30 cents per share, compared with $2.21 billion, or $2.31 per share, a year earlier. GBH Insights called the metric "disappointing" in an investor note, and said it speaks to Snap's user growth problem, which is a "major black cloud" over the company.

"Our redesign created some headwinds in our revenue this quarter by disrupting user behavior and creating some apprehension among our advertising partners", Snap CEO Evan Spiegel said in prepared remarks.

The company's new look, which separated content from friends and channels, upset both users and publishers and even prompted celebrities such as Kylie Jenner to publicly cut ties with the platform. A Change.org petition asking the company to remove the redesign now has more than 1.2 million signatures. "The confluence of the app redesign and backlash from core power users was a gut punch to Snap during the quarter, with signs more speed bumps could be on the horizon".

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