revenue surged in the latest quarter, as the company attracted more users to Snapchat as well as advertisers looking to reach people spending more time online and on mobile devices as a result of the coronavirus pandemic.
Quarterly revenue rose 52% to $678.7 million, well ahead of analysts’ estimates of $557 million, according to a FactSet poll. Many advertisers resumed or increased their marketing budgets during the quarter, the company said, as businesses redirected money to self-serve advertising, a faster way of launching a campaign while reducing costs.
Snapchat added 11 million users from the prior quarter to end the September period with 249 million daily active users. The user growth was stronger than analysts had forecast and showed that the platform benefited from strong engagement even with the emergence of TikTok and strong results earlier this year from
networks. Snap said it continues to see strong engagement among Gen Z and millennial users in the U.S., the U.K. and France.
Shares rose more than 20% in after-hours trading to $35. Snap’s shares had gained 74% this year through Tuesday’s close.
On a conference call Tuesday, Jeremi Gorman, Snap’s chief business officer, said the company landed business from advertisers who sought to “align their marketing efforts with platforms who share their corporate values.” A range of companies joined calls from civil-rights groups earlier this year to pull back ad spending on Facebook over what they described as the company’s failure to weed out hate speech and misinformation.
said in July that its second-quarter performance was helped by firms who moved money from Facebook to its platform.
Snap is among the first advertising-dependent companies to post results from the most recent period, and its momentum could bode well for tech titans ahead of an extended holiday-shopping season. The final quarter of the year is typically the strongest for Snap, and executives said if current conditions continue, revenue could rise between 47% and 50% from last year.
Chief Executive Evan Spiegel said that he was pleased with the company’s growth in the period and that it will continue long-term investments on things including augmented reality for its app.
At The Wall Street Journal’s Tech Live conference on Tuesday, Mr. Spiegel said that as a result of the pandemic, brands have been more willing to try augmented reality to reach customers. Makeup and shoe brands, for example, are using Snap’s augmented reality to let users try their products.
“The pandemic has forced all of us to rethink the way we do business,” Mr. Spiegel said at the virtual conference.
Users’ daily time spent watching Shows has increased 50% compared with a year ago, Snap said, as the company has been working to increase the amount of original content through its app. The company drew millions of viewers to content like the “VS the World” docuseries with mixed-martial artist Conor McGregor and launched new unscripted series with celebrities such as Jaden Smith and Kevin Hart.
The company narrowed its third-quarter loss to $199.8 million from $227.4 million in the same period last year.
Write to Kimberly Chin at firstname.lastname@example.org
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Appeared in the October 21, 2020, print edition as ‘Snapchat Users, Revenue Soar Past Estimates.’