Skip to main content

Snap Inc’s Snapchat on Tuesday beat analysts’ estimates for user growth and revenue, getting a boost from a better version of its Android app and the launch of new augmented reality photo lenses.

The company said the number of daily active users rose to 203 million in the second quarter ended June 30 from 190 million in the prior quarter. The user metric was also up from 188 million a year earlier.

Shares of Snap jumped 9 per cent to $16.29 in after-hours trading.

Story continues below advertisement

The AR lenses, which are filters that can overlay everything from bunny ears to freckles onto a user’s photo, went viral when it introduced a lens that let users switch their gender in photos.

The latest daily active user figure, widely watched by investors and advertisers, beat analysts’ average estimate of 192.2 million, according to IBES data from Refinitiv.

After struggling last year with declines in users and high executive turnover, Snap finally returned to growth in the first quarter.

In recent months, it scored wins with its augmented reality lenses, launched mobile games within Snapchat in partnership with game developers such as Zynga Inc and invested in more content on Discover, the part of the app that houses original shows and content from media partners.

“The popularity of these lenses drew millions of people into our rebuilt Android application, where they experienced the new and improved Snapchat that led to increased engagement,” Chief Executive Officer Evan Spiegel said on the earnings call with analysts.

Snap’s revenue, which it earns from selling advertising on the app, jumped about 48 per cent to $388 million and beat Wall Street’s average estimate of $359.7 million, according to IBES data from Refinitiv.

Snapchat has been largely untouched by privacy issues plaguing Facebook Inc and Google’s YouTube, two of Snap’s rivals for digital ad dollars, because of its disappearing messages that make it difficult to broadcast misinformation or unsavory content.

Story continues below advertisement

Snap expects daily active users to be between 205 million and 207 million in the third quarter, Chief Financial Officer Derek Andersen said.

Of the 13 million daily active users Snap gained during the second quarter, 7 million to 9 million were from the new augmented reality lenses, Andersen said.

Analysts questioned whether Snap could retain the new users it gained from the lenses, during the earnings call.

Spiegel said the lenses not only attracted new users but re-engaged returning users.

It is unclear if Snap can continue having hits like viral lenses every quarter, “but if you can keep engagement going, that’s the key,” said Ron Josey, an analyst with JMP Securities.

Average revenue per user jumped more than 36 per cent to $1.91 in the quarter.

Story continues below advertisement

Snap emphasized its investment in content on Discover, which increased the time spent on the app by 60 per cent compared with last year, said Kamal Khan, an analyst at financial markets platform Investing.com.

“That trend will continue in the near and medium term, but just like Netflix, it’s betting a lot on content against rivals with much, much deeper pockets,” he said.

Net loss narrowed to $255.2 million, or 19 cents per share, from $353.3 million, or 27 cents per share, a year earlier.

Excluding items, the company lost 6 cents per share. Analysts were expecting a loss of 10 cents per share.

Snap expects third quarter revenue in the range of $410 million to $435 million. Analysts on average were expecting revenue of $402.1 million, according to IBES data from Refinitiv.

Report an error
Tickers mentioned in this story
Unchecking box will stop auto data updates
Due to technical reasons, we have temporarily removed commenting from our articles. We hope to have this fixed soon. Thank you for your patience. If you are looking to give feedback on our new site, please send it along to feedback@globeandmail.com. If you want to write a letter to the editor, please forward to letters@globeandmail.com.

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff. Non-subscribers can read and sort comments but will not be able to engage with them in any way. Click here to subscribe.

If you would like to write a letter to the editor, please forward it to letters@globeandmail.com. Readers can also interact with The Globe on Facebook and Twitter .

Welcome to The Globe and Mail’s comment community. This is a space where subscribers can engage with each other and Globe staff.

We aim to create a safe and valuable space for discussion and debate. That means:

  • Treat others as you wish to be treated
  • Criticize ideas, not people
  • Stay on topic
  • Avoid the use of toxic and offensive language
  • Flag bad behaviour

Comments that violate our community guidelines will be removed.

Read our community guidelines here

Discussion loading ...

Cannabis pro newsletter
To view this site properly, enable cookies in your browser. Read our privacy policy to learn more.
How to enable cookies