Snap's ad business defied coronavirus fears in Q1 and its stock is popping

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Snap's ad business defied coronavirus fears in Q1 and its stock is popping
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  • 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.
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Snap grew its revenue by 44% in the first three months of the year, beating Wall Street targets as its advertising business showed surprising strength amid the coronavirus pandemic.

The stronger-than-expected report sent Snap's stock suring 18% in after hours trading on Tuesday.

Snap's results were being 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 — are set to report next week.

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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:

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  • 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, and up as much as 50% in some of the most regions most severly affected by the coronavirus.

Whether marketeters continue to spend money trying to reach those users as the virus takes a toll on business, 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 quarter were not as affected.

The real impact to Snap's ad business may come in the current quarter.

Read the original article on Business Insider
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