Image: CNBC.

On Wednesday afternoon, Snap Inc. reported for the first time their quarterly earnings after launching its IPO last month. Q1 numbers reported 166 million daily active users of Snapchat, but revenue losses made the company’s stock plunge 25% in after-hours trading.

The figures show Snap and Snapchat continue to grow in all aspects, but that increase has slowed down on a quarterly basis, particularly after Facebook introduced Instagram Stories as a jab to its rival last year.

Investors were not pleased with the announcement, and users fear the app may suffer the same fate as Twitter. The platform was huge once and even a worthy Facebook contender, but now struggles to stay relevant and profitable even with constant updating to add new features.

Snap’s financial quarter figures breakdown

In short, Snap’s Q1 numbers fell short of analysts’ expectation but were still positive. The company’s expenses after going public, however, face it with a long-term challenge to become profitable again and have sparked worries among investors.

Snapchat has 166 million active users, which are up 5% from 158 million in Q4 2016 and represent a 36% increase year-over-year. In spite of this, growth rates are staggering and are expected to continue unless the app introduces attractive and game-changing features.

Average revenue per user is up 181% this quarter compared to last year’s numbers this same time of the year. During Q1 2016, Snap registered $0.32 per user, while Wednesday’s report placed ARPU at $0.90. This is also down from $1.05 last quarter.

Snap’s most significant numbers, even if they are deemed not meaningful in the report, are its net losses. Losses this quarter amount to $2.2 billion after the company issued stock bonus compensations following its successful IPO, out of which CEO Evan Spiegel himself got $750 million.

What does the future look like for Snap?

These one-time expenses are nothing to worry about, the company said, although it could be if it doesn’t catch up to the competition. Many of today’s social giants had poor stock performance after disclosing their first quarterly earnings reports, including Twitter, Facebook, and LinkedIn.

Still, the current rivals of Snapchat have managed to outpace it. Most notably Instagram Stories, which recently reached 200 million daily active users, and WhatsApp status, which recorded 175 million. Facebook as a whole dwarfs Snapchat eight times over with 1.8 million users.

Analysts say Snap will have to keep doing what it did today on the eve of is conference: introducing new features that make the platform attractive to its user base, so it continues to grow. Snapchat now has a magic eraser, an emoji pen, an infinity timer option, and an endless loop tool for snaps.

Source: Snapchat