The pandemic was not too terrible for Snap. The company behind Snapchat announced today’s second quarter results, which outline how things turned out during the COVID-19 outbreak around the world. The user base has increased daily by 9 million people in the past quarter, and revenue has increased 17 percent year-over-year to $ 454 million. Snap positions growth as a victory, especially given that advertiser budgets are shrinking due to a global economic downturn.
“The economic environment has become a challenge for many of our advertising partners and this has impacted the growth of our business,” said Derek Andersen, Snap CFO, in prepared comments. The pandemic took a clear hit in the company’s business. Annual growth in January and February was about 58 percent, he says, before dropping to about 25 percent in March. He further said that high growth early in the year indicates that Snap could thrive under normal market conditions.
Still, Andersen acknowledges that the economic forecast in the future is foggy and that Snap’s success is likely to depend on how long the pandemic continues and whether advertisers continue to tighten their budgets.
“We are cautiously optimistic that trends may improve over time as conditions begin to normalize, but we are also aware that economic conditions may not improve and that some of our advertising partners may continue to face headwinds caused by the crisis experience, “says Andersen.
User growth is encouraging for the company, but also predictable, as many people around the world are stuck with home orders. The company says users check Snapchat more than 30 times a day on average, and CEO Evan Spiegel says in his prepared comments that the team has seen an increase in “group activities,” such as games, phone calls, and chats. Snap launched five games this quarter and saw the average daily game time more than double in the month of March, he says.
Snap is one of the first major social platforms to announce second-quarter earnings, but the story that follows will remain advertiser fallout during the pandemic. For example, brands have boycotted Facebook for handling President Donald Trump’s flammable messages, as well as ongoing issues with misinformation. Meanwhile, TikTok is facing a full potential ban in the US. Snap, for his part, is just going through the storm, trying to get more users into the fold and keep advertisers on deck.