Coronavirus

Snapchat Grows Daily Active Users to 229 Million

Snapchat
Robyn Beck/AFP/Getty Images

The Snapchat log-in page is displayed on a mobile phone.

Snap stock rose over 17 percent in after-hours trading on Tuesday as usage grew during the coronavirus pandemic.

Snapchat’s parent company on Tuesday reported user growth rising 20 percent to 229 million daily active users during the first quarter of the year, compared to usage for the same period last year.

Snap Inc., which owns the messaging app, saw daily active users rise from 218 million at the end of the previous quarter and 190 million at the end of the first quarter last year. During the latest quarter, usage grew during the novel coronavirus pandemic as people sheltered in their homes.

Overall revenue jumped 44 percent to $462 million, compared to 2019, while the diluted net loss per share came to 8 cents. That beat an analyst forecast of 224.3 million daily active users for the first quarter and overall revenue of $433.6 million, while just falling short of a per-share loss estimate of 7 cents.

The company's net loss during the first quarter was $305.9 million, compared to a loss of $310.4 million for the first quarter of 2019. Average revenue per user came to $2.02, against a year-earlier $1.68.

Shares in Snap rose in after-hours trading by $2.18, or nearly 17 percent, to $14.62.

While Snap posted growth in usage, the company's latest financials were eagerly anticipated by Wall Street as it remains highly exposed to the current advertising downturn and budget cuts by brand marketers.

"Given the uncertainties related to the ongoing COVID-19 pandemic and the rapidly shifting macro conditions, we are not providing our expectations for revenue or adjusted EBITIDA for the second quarter of 2020," the company added in its financial results.

During an analyst call Tuesday, Snap CEO Evan Spiegel was understated as he touted Snap's recent quarterly performance, noting it took place against the backdrop of the coronavirus pandemic.

"It has been a very difficult few months for the world, but we remain hopeful and optimistic about the future," he said. "As a team, we have been focused on doing our part to help as we all navigate this unimaginable tragedy. We’re inspired that people are working together and staying home to save lives, and it gives us added faith in humanity to see how deeply we all care about supporting one another during this time."

The exec also discussed Snap navigating the advertising downturn as the crisis affects the global economy and disrupts his company's business model. "While many advertising budgets declined due to COVID-19, we experienced high revenue growth rates in the first two months of the quarter which offset our lower growth in March. These high growth rates in the beginning of the quarter reflect our investments in our audience, ad products and optimization, and give us confidence in our ability to grow revenue over the long term," Spiegel told analysts.

Stock in Snap soared in after-hours trading in part due to Spiegel's comments that his company did see "lower growth" during March, and so managed to keep growing ad revenues as COVID-19 drove hard into the U.S. economy.

Snap execs talked on the analyst call about the disruption to struggling marketing brands from the pandemic, as some "pause" their ad messaging to adjust to a consumer market in rapid flux or cut their ad spending overall to shore up balance sheets.

Snap itself is shifting its ad sales team for direct response marketing as consumers shelter at home. For example, the social messaging app is looking to target Hollywood studios moving from theatrical to digital releases of their tentpoles as they chase moviegoers.

This article was originally published by The Hollywood Reporter.

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