- Snap, Snapchat’s parent company, beat analysts’ expectations for Q1 2020, sending stock soaring 18%.
- The company reported stronger-than-expected numbers for revenue and daily active users.
- Snap is one of the first internet companies to report Q1 2020 earnings, which show strength for the company amid the coronavirus pandemic.
- Visit Business Insider’s homepage for more stories.
Snap’s revenue increased 44% in the first three months of the year, beating Wall Street targets as homebound users logged on to its social media service in droves and its advertising business showed surprising strength amid the coronavirus pandemic.
The stronger-than-expected report sent Snap’s stock surging roughly 20% in after hours trading on Tuesday.
Snap’s results were anxiously awaited and closely watched by investors eager for signs of the pandemic’s impact on the online advertising business. Snap is one of the first major internet and social media companies to report its Q1 earnings, with Google, Facebook and Twitter — all heavily dependent on ad spending — set to report results next week.
Following Snap’s earnings report Tuesday, stocks for both Facebook and Twitter were up more than 2% in after hours trading.
“Our product has never been more important in people’s lives, especially for helping close friends and family stay together emotionally while they are separated physically,” CEO Evan Spiegel said during a conference call with investors.
But while Snap’s Q1 results topped Wall Street expectations, the company did not provide a financial forecast for the current quarter, citing “uncertainties related to the ongoing COVID-19 pandemic and the rapidly shifting macro conditions.”
Here are the key numbers, as well as the average analyst estimates, via Bloomberg:
- Revenue: $462.5 million, up 44% year-on-year (versus estimated $420.8 million)
- Daily Active Users: 229 million, up 20% year-on-year (versus 223.8 million estimated)
- Earnings Per Share (adjusted): Loss of $0.08, inline with Wall Street expectations
With people all over the world confined to their homes in order to stop the spread of the coronavirus, Snap said usage of its internet app increased in Q1. The total daily time that users spent on Snap’s Discover feature increased by 35% in Q1, the company said.
And communications between friends on the platform was up 30% in the last week of March compared to the last week in January, and up as much as 50% in some of the most regions most severly affected by the coronavirus.
Whether marketers continue to spend money trying to reach those users as the virus throttles the economy, remains to be seen. The lockdowns that have brought business to a halt in much of the world did not become widespread until March, meaning that the first two months of Snap’s first quarter results were not as affected.
The second quarter will likely be a different story.
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Indeed, Snap’s finance chief said during the call Tuesday that revenue growth in the first 19 days of April had decelerated to 15%, and had slowed further to an 11% clip in the most recent week.
“We are cautiously optimistic that trends could improve over time if conditions begin to normalize,” Snap CFO Derek Andersen said. “But we are also conscious that economic conditions may not improve and some of our advertising partners could continue to face headwinds caused by the crisis.”
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