On Thursday, Snap’s users and revenue in the second quarter exceeded Wall Street expectations, setting the highest growth rate since the end of 2017, as the new features of its instant messaging app Snapchat attracted more users.
The share price of Snap, headquartered in Santa Monica, California, rose about 10% to US$69.20 (approximately 5,150 rupees) in after-hours trading, after its forecast for this quarter was also higher than expected.
Snapchat is known for its story feature, which allows users to post updates that disappear after 24 hours. It has expanded its app into five sections to cover media content and viral short video clips to keep users engaged and attract more Advertisers.
According to Refinitiv’s IBES data, in the quarter ended June 30, daily active users increased by 23% to 293 million, higher than the 290.3 million estimated by analysts. User growth exceeded the company’s previous best 22%.
Snap’s revenue increased by 116% to US$982 million (approximately Rs 73.1 billion), much higher than the expected US$845.9 million (approximately Rs 63 billion). Previously, its strongest growth rate was 66%.
The company continued to grow throughout the pandemic by promoting advertising formats on Snapchat designed to bring sales to advertisers, such as allowing users to swipe on mobile ads to visit the brand’s website.
Snap forecasts revenue in the third quarter between 1.07 billion U.S. dollars (approximately 69.7 billion rupees) and 1.09 billion U.S. dollars (approximately 81.1 billion rupees), and it is expected that daily active users will increase by 21% to 301 million, both exceeding expectations.
Analysts expect revenue of US$1.01 billion (approximately Rs 7,520 crore) and daily active users of 298.5 million.
Snap’s Chief Commercial Officer Jeremi Gorman said in a statement that Apple’s new privacy controls implemented in April are designed to restrict digital advertisers from tracking iPhone users without their knowledge. This has caused “some interference with advertisers’ needs. “.
However, Gorman said it is too early to assess the long-term impact on Snap’s business.
In order to help brands increase sales, Snap has also invested heavily in augmented reality technology to achieve functions such as helping users to try on virtual makeup or clothes.
© Thomson Reuters 2021