By Nicolas Vega
Snapchat parent Snap Inc. on Tuesday reported revenue that demolished Wall Street’s expectations as millions of hunkered-down users stared at its app amid the coronavirus pandemic.
The social network famous for its disappearing photos and messages said that it saw usage jump toward the end of March as people turned to it to communicate with friends and family. Snap also said that it saw increased engagement with its in-app games and original content.
Snap reported daily active user numbers grow 20 percent year-over-year to 229 million, beating analyst forecasts of 224.7 million. Revenue clocked in at $462.5 million, a 44 percent year-over-year increase that outpaced Wall Street’s predicted $428.8 million and showed few ill effects from the pandemic.
Shares of Snap opened trading up more than 23 percent, at $15.33.
“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,” Snap’s 29-year-old chief executive Evan Spiegel said.
The company said higher revenue in January and February helped offset slower growth in March as advertisers began to tighten marketing budgets due to the coronavirus.
Small and medium-sized businesses have been hard-hit during the pandemic, but represent a smaller portion of Snap’s direct response ad business, which has helped protect revenue, Snap’s chief business officer Jeremy Gorman explained on the earnings call.
Moving forward, Snap said it will have its sales team focus on serving advertisers in industries like gaming, home entertainment and consumer packaged goods, which are expected to see higher demand from people stuck at home.
For example, Snap could help movie studios pivot to digital or streaming releases, Spiegel said.
Snap said it would not provide its usual guidance for the next quarter, given the uncertainty caused by the coronavirus.