Snap adds more users amid coronavirus lockdown
The ephemeral messaging app now has 229 million daily active users.
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Like other social networks, Snap has seen a surge in usage during the pandemic.
Snapchat grew its number of users in the first three months of 2020 as more people turned to the ephemeral messaging app to keep in touch with their closest friends and family.
Snap, the app's parent company, said Tuesday the app had 229 million daily active users in the first quarter, up 20 percent compared to the same period last year. Snapchat had 218 million users in the fourth quarter.
Like other social networks such as Facebook, Snap has seen a surge in usage during the coronavirus pandemic. Earlier in April, Snap said that snaps sent between friends and to group chats reached an all-time high. The company said Tuesday that communication with friends increased by more 30% in the last week of March compared to the last week of January. The average time spent on the app also jumped more than 20% during the same period with higher growth rates in France and the UK.
Snapchat users are also using voice and video calling more. The company said calling has grown more than 50% from late February to late March. It's also seen users spend more time watching shows, playing games and using augmented reality effects on the app. Last week, Snap launched a resource hub to help businesses.
"Snapchat is helping people stay close to their friends and family while they are separated physically, and I am proud of our team for overcoming the many challenges of working from home during this time while we continue to grow our business and support those who are impacted by COVID-19," Snap's CEO Evan Spiegel said in a statement. COVID-19 is the respiratory illness caused by the coronavirus.
Debra Aho Williamson, an analyst for eMarketer, said in a statement that the user growth was expected because of the shelter-at-home orders. Snap's ad sales were higher than analysts expected. Snap reported revenue of $462 million, beating Wall Street's estimates of $428.80 million.
"If advertisers did cut budgets for Snapchat advertising, they may not have done so in large numbers before the end of the quarter," she said. "I believe Q2 will be a much more important quarter to watch."
Spiegel said during a call with analysts that even though advertisers weren't spending as much because of the coronavirus outbreak, the company had high revenue growth rates in the first two months of the quarter that offset its lower growth rate in March.
The company lost 21 cents per share, falling short of expectations of a loss of 20 cents per share. Excluding certain expenses such as stock-based compensation, Snap lost 8 cents per share in the first quarter, slightly worse than the loss of 7 cents per share that analysts surveyed by Thomson Reuters expected.
The company's stock jumped 20% in after-hours trading to $14.93 per share.
Snap Chief Financial Officer Derek Andersen said the company is "cautiously optimistic" about its future ad business even as it weathers the impact from the coronavirus outbreak.
A lot depends on how the world and governments manage the coronavirus going forward, he said.
"I also want to point out there's a lot we don't know and so because of that, I think it's difficult to predict with great confidence exactly what trends look like going forward," Andersen said.