Shares of Santa Monica, California-based Snap rose about 10%
to $69.20 in extended trading, after its forecast for the current quarter also
came in above expectations.
Snapchat, known for its Stories feature that lets users post
updates that disappear after 24 hours, has grown its app into five parts
spanning media content and viral short-form video clips to keep users engaged
and draw in more advertisers.
Daily active users rose 23% to 293 million during the
quarter ended June 30, above analysts' estimates of 290.3 million, according to
IBES data from Refinitiv. User growth beat the company's prior best of 22%.
Snap's revenue jumped 116% to $982 million, well above the
expectation of $845.9 million. Previously, its strongest growth rate was 66%.
The company continued to grow throughout the pandemic by
promoting ad formats on Snapchat geared toward bringing in sales for
advertisers, such as letting users swipe up on a mobile ad to go to the brand's
website.
Snap forecast third-quarter revenue between $1.07 billion
and $1.09 billion, and it expects daily active users to grow 21% to 301
million, both exceeding expectations.
Analysts are expecting revenue of $1.01 billion and daily
active users of 298.5 million.
New privacy controls implemented by Apple Inc in April,
which were intended to limit digital advertisers from tracking iPhone users
without their knowledge, caused "some disruption" to advertiser
demand, said Snap's Chief Business Officer, Jeremi Gorman, in a statement.
However, it was too early to gauge the long-term impact on
Snap's business, Gorman said.
In order to help brands increase sales, Snap has also
invested heavily in augmented reality technology for functions such as helping
users virtually try on makeup or clothes.
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