The coronavirus pandemic fueled strong second quarter revenue for Snapchat owner Snap but didn’t lift the company’s user base as much as it did the previous quarter.
The company on Tuesday reported second quarter revenue of $454 million, up 17 percent compared with the same period last year, a sign that advertising on the platform was strong in spite of the shutdown’s earlier disruption of the marketing industry. The company recorded a net loss of 23 cents per share.
Snapchat’s base of daily active users grew 17 percent year-over-year to 238 million. It represented sequential quarterly growth of 9 million and was lower than the 239 million that analysts were expecting.
Snap’s stock, which closed the day down around 2 percent, was trading down as much as 9 percent immediately following its earnings release on the softer-than-expected subscriber numbers.
“We continued to grow our community and business in a challenging and uncertain environment,” CEO Evan Spiegel said in a statement. “I am proud of our team for innovating on new experiences for our community and driving value for our partners, demonstrating the importance of our service in people’s lives. We are grateful that the resilience of our business has allowed us to remain focused on our future growth and opportunity.”
Snapchat now reaches more than 100 million people in the U.S. but is seeing growth in emerging markets like India, where its DAUs grew by 100 percent year-over-year.
On the app’s Discover platform for entertainment and news programming, 45 percent more Snapchatters watched a show on average each day than in the same quarter the previous year. And the daily average number of Snapchatters over the age of 35 engaging with Discover content increased by 40 percent.
“The strong engagement with our platform and products is driving results in our advertising business despite the many macro headwinds currently experience by our partners,” Spiegel noted in prepared remarks shared ahead of his earnings call with investors.
He added, in an apparent jab at the ad boycott taking place on Facebook over its handling of 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 once again said it would not provide financial guidance for the third quarter given “the ongoing COVID-19 pandemic and the rapidly shifting macro conditions.”
CFO Derek Andersen, in the prepared remarks, did say Snap estimates third quarter revenue growth around 32 percent year-over-year through July 19. “While we are cautiously optimistic that these trends could sustain over time, we are also conscious that operating conditions may remain volatile,” he said, noting that advertiser demand from the July to September period was usually boosted by the back-to-school season, film releases and fall sports that are “unlikely to materialize in the same way they have in prior years.”
This article was originally published by The Hollywood Reporter.