Snap loses user growth estimates, stocks drop
07/22/2020
Business
By Sheila Dang and Akanksha Rana
Snap’s shares fell 11% in after-hours trading before reducing losses to around 6%.
The Snapchat owner said daily active users (DAUs), a measure widely observed by investors and advertisers, rose 17% to 238 million in the second quarter ending June 30. Analysts expected 238.44 million, according to IBES data from Refinitiv.
Snap has focused on helping advertisers increase sales directly from their ads, fueling revenue growth, even as many brands have cut marketing budgets due to the pandemic.
“The growing focus on brand security and privacy across the industry puts us in a unique position of strength as we have invested in these areas since the beginning of our business,” said Snap CEO Evan Spiegel, during an earnings call with analysts.
Snap forecast 242 million to 244 million daily active users in the current quarter, below analyst target of 244.82 million according to Refinitiv data.
Advertising sales revenue increased approximately 17% to $ 454.2 million during the quarter, above estimates of $ 440.8 million.
Increases in Snap’s revenue set the bar for Twitter, which reports earnings on Thursday, and Facebook results next week, said Debra Aho Williamson, an analyst at research firm eMarketer.
The average income per user was $ 1.91, hardly changed compared to the quarter of the previous year. Outside of North America and Europe, that measure fell 25% to 89 cents as coronavirus-related factors caused more damage, Snap said.
Snap’s net loss expanded to approximately $ 326 million, or 23 cents a share, from $ 255.2 million, or 19 cents a share, a year earlier.
Chief Financial Officer Derek Andersen said third-quarter revenue growth was 32% through July 19.
But since the pandemic could further weaken the economy, Snap’s internal model is based on 20% revenue growth for the third quarter, Andersen said.
(Report by Akanksha Rana in Bangalore and Sheila Dang in New York; Edition by Anil D’Silva, Tom Brown, and Richard Chang)
