Snap added 7 million daily active users to reach 173 million with a 4.2% growth rate, up from 166 million DAU at a 5% growth rate in Q1. Revenue reached $181 million with a loss of -$0.16 earnings per share. That’s compared to Wall Street’s estimates of $186.2 million in revenue and a loss of -$0.14 EPS, and $149.6 million in Q1 revenue.

Investors we spoke to wanted to see daily active user count grow 5 million to at least 171 million, and average revenue per user above $1.05 or $1.10. $Snap had closed at $13.69 today just before earnings. 

Snap has had a tough quarter since it fell way short on its Q1 earnings report and its share price fell from nearly $23 to around $18. That’s after pricing its May IPO at $17 and seeing a big first day pop. Further competition has depressed the share price, as Instagram Stories and WhatsApp Status now each have 250 million users, making the clones much bigger than Snapchat as a whole. Snap only caught a break last week when rumors that Google was interested in acquiring it briefly perked up the share price.

Snap has been aggressively courting advertisers in hopes of getting its revenue growing faster, adding self-serve and bulk ad buying tools and striking ad measurement partnerships. It scored a viral hit with its dancing hot dog augmented reality feature, but that fad has come and gone.

Snap has plenty to fix if it’s going to claw its way back to its $22 billion private funding valuation or its $31.4 billion post-IPO pop price. An algorithmically sorted feed, better relations with brands and influencers, and a clear strategy for fending off Faceboo could all help secure Snapchat’s future. But that could require diverting from some of the product philosophies that got it this far.

For more on what Snap should do next, read our list: 8 ways to fix Snapchat

Featured Image: Bryce Durbin/TechCrunch

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