Snap Revenue Soars With Users Stuck at Home
By Georgia Wells
Snap Inc. on Tuesday reported a surge in quarterly growth in
users and revenue in the first quarter, as homebound users turned
to its chat app for connection with friends amid the pandemic.
The results mark a surprise as many analysts estimate sharp
decreases in digital ad spending in the quarter, the first to show
the impact of the coronavirus crisis. As Snap is the first
social-media company to report results for the quarter, its
performance could bode well for heavyweights Facebook Inc. and
Alphabet Inc., which deliver earnings next week.
Communication with friends on the company's Snapchat app
increased by more than 30% in the last week of March compared with
the last week of January, the company said. In areas hardest hit by
the pandemic, communication with friends on Snapchat increased more
The Santa Monica, Calif., company said its daily user base rose
11 million from the previous quarter to 229 million, marking the
fifth consecutive quarter of growth. Snapchat's ability to increase
its user count is crucial to attracting more advertisers and
revenue. Analysts polled by FactSet had expected the user count to
rise to 224 million.
Snap's revenue rose 44% in the first quarter to $462.5 million,
up from $320.4 million a year earlier and significantly beating
analyst estimates of $430 million, according to FactSet.
"Snapchat is helping people stay close to their friends and
family while they are separated physically," Snap Chief Executive
Evan Spiegel said in prepared remarks.
Through Monday's close, shares of Snap had lost about 20% this
year. The value of the company's stock more than doubled in 2019.
Following the first-quarter report, Snap's stock rose about 8% in
The results indicate that Snap may be well positioned despite
increasing uncertainty in the global economy. Nevertheless, the
company didn't provide guidance for the second quarter, citing the
continuing pandemic and rapidly changing economic conditions. In
the past, Snap has provided forecasts for revenue and adjusted
Mr. Spiegel said the pandemic has forced a shift to digital
behavior across every aspect of people's lives that could benefit
Snap. As people are sheltering in place, he said, their
communication, commerce, entertainment, fitness and learning habits
are forcing companies to shift to digital more quickly.
"We believe that this will accelerate the digital transformation
across many businesses, and that the heightened levels of activity
we are seeing today will lead to a sustained uplift in the digital
economy over time," Mr. Spiegel said.
Jeremi Gorman, Snap's chief business officer, said the company
has also shifted its sales team to focus on categories that are
faring better during the pandemic, such as gaming, home
entertainment, e-commerce and consumer packaged goods.
Still, Snap is far from profitable. Snap reported its loss
shrank slightly in the first quarter to $305.9 million, or 21 cents
a share, from $310.4 million, or 23 cents a share, in the same
period a year ago. Analysts polled by FactSet had expected a loss
of 20 cents a share.
In 2019, Mr. Spiegel had made it his company's "stretch" goal to
become profitable that year.
Write to Georgia Wells at Georgia.Wells@wsj.com
(END) Dow Jones Newswires
April 21, 2020 16:26 ET (20:26 GMT)
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