The pandemic has not been too terrible for Snap. The company behind Snapchat today announced its second-quarter earnings, detailing how its business fared during the COVID-19 outbreak worldwide. Its user base increased by 9 million people daily during the last quarter, and its revenue increased 17 percent year-over-year, to $ 454 million. Snap is positioning growth as a victory, especially given that advertiser budgets are shrinking amid a global economic downturn.
“The economic environment has become a challenge for many of our advertising partners and this has had an impact on the growth rate of our business,” says Derek Andersen, CFO of Snap, in prepared comments. The pandemic had an obvious impact on the company’s business. Year-over-year growth in January and February was about 58 percent, he says, before slowing to about 25 percent in March. He went on to say that high growth earlier in the year suggests that under normal market conditions Snap could prosper.
Still, Andersen acknowledges that the economic outlook is hazy going forward and that Snap’s success will likely depend on how long the pandemic continues and whether advertisers continue to adjust their budgets.
“We are cautiously optimistic that trends could improve over time if conditions begin to normalize, but we are also aware that economic conditions may not improve and some of our advertising partners may continue to face headwinds caused by the crisis. “says Andersen.
User growth is encouraging for the company, but it is also predictable given that many people around the world have been caught up in requests to stay home. The company says users review Snapchat an average of more than 30 times a day, and CEO Evan Spiegel says in his prepared comments that the team has seen an increase in “group activities,” such as games, calls, and chats. Snap released five games this quarter and saw average daily gaming time more than double in March, he says.
Snap is one of the first major social platforms to announce its second-quarter earnings, but the story to follow will continue to be the consequence of advertisers in the midst of the pandemic. The brands, for example, boycotted Facebook for their handling of incendiary posts by President Donald Trump, as well as current problems with misinformation. Meanwhile, TikTok faces a possible total ban in the United States. Snap, meanwhile, is just weathering the storm, trying to lure more users into the fold and keep advertisers on deck.
