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(Reuters) – Snap Inc (SNAP.N) on Tuesday said an initial lift in user growth at the start of coronavirus-led lockdowns dissipated faster than it expected, though the company beat expectations for quarterly revenue as advertisers turned to the app to reach younger users.
Shares of Snap fell 11% in after-hours trading before bouncing back to trade around 5.4% lower on the financial results.
The Snapchat owner said daily active users (DAUs), a widely watched metric by investors and advertisers, rose 17% to 238 million in the second quarter ended June 30. Analysts were expecting DAUs of 238.44 million, according to IBES data from Refinitiv.
Snap has focused on helping advertisers increase sales directly from Snap ads, which contributed to the company’s revenue growth at a time when many brands have been cutting marketing budgets due to the pandemic.
The company has also positioned itself as a safe platform for brands to advertise on due to its professed focus on serving as a communication tool for friends rather than a place to broadcast ideas, as more than 1,000 companies have paused ads on larger rival Facebook Inc (FB.O) due to concerns about hate speech.
“The growing focus on brand safety and privacy across the entire industry places us in a unique position of strength as we have invested in these areas from the beginning of our business,” Snap Chief Executive Evan Spiegel said in prepared remarks.
Snap’s revenue, which it earns from selling advertising on the app, jumped about 17% to $454.2 million during the quarter, above estimates of $440.8 million.
Snap’s revenue gains now set the bar for Twitter, which reports earnings on Thursday, and Facebook’s results next week, said Debra Aho Williamson, an analyst at research firm eMarketer.
The company’s net loss widened to about $326 million, or 23 cents per share, from $255.2 million, or 19 cents per share, a year earlier.
Chief Financial Officer Derek Andersen said third-quarter revenue growth was 32% through July 19.
But since the pandemic could cause the economy to worsen, Snap’s internal model is based on revenue growth of 20% for the third quarter, Andersen said.
The company also forecast DAUs to be between 242 million and 244 million in the current quarter.
Source:www.reuters.com
