The CEO reported strong growth in users and investment.
Leaders of the social network said the pandemic helped advertising and users increase exponentially.
Snapchat, the social network that specialises in instant photo messaging, has been relegated to the sidelines in recent years, mainly due to the emergence of Instagram and TikTok. However, in the last few hours, it announced revenue and user gains that exceeded analysts’ estimates. According to company leaders, the company’s investments in content and creative tools attracted young people and advertisers trying to reach them.
Second-quarter sales more than doubled to $982.1 million, the company said late in the week. That eclipsed analysts’ average forecast of $846.9 million. Snapchat, the mobile app for sending vanishing messages and watching video content, had 293 million daily active users in the second quarter, beating analysts’ expectations of 290.72 million, according to data compiled by Bloomberg.
Snapchat has been benefiting from a boom in the digital advertising and e-commerce market during the pandemic, as businesses of all sizes tapped the social media platforms to reach out to customers who were stuck at home to avoid the spread of Covid-19. Like its social media rivals, the company has also been investing in rewarding creators of its app who post entertaining videos, giving users a reason to return to the app frequently.
“While it’s unclear when these restrictions will end and how user behaviour will evolve, we are seeing a stabilisation and early recovery in story posting as some communities are reopening,” Snap CEO Evan Spiegel stated. “We’re cautiously optimistic that this will lead to more time spent viewing friends’ Stories as the world begins to open up.”
What does the company’s future look like?
In the longer term, Snap is also investing heavily in augmented reality as part of its plan to drive revenue growth of more than 50 per cent over multiple years. More brands are turning to Snapchat to experiment with more personalised shopping experiences that allow shoppers to try on clothes, accessories or cosmetics products on their smartphones.
Snap has made some acquisitions to strengthen the technology, including the $124.4 million purchase of Fit Analytics, a technology company that uses machine learning and webcams to match products to potential shoppers. Snap also enhanced the visibility of the app’s scanning feature, which gives users the ability to scan an outfit and receive recommendations for similar looks from hundreds of brands.