Snap’s chief executive Evan Spiegel said that the easing of coronavirus lockdowns would boost engagement on his platform as users increasingly co-ordinate socialising, as the company posted bumper first quarter results.
Sales at Snap, the parent of messaging app Snapchat, rose 66 per cent year on year to $770m in the first quarter of last year, beating analyst expectations of $742m, it said on Thursday. Daily active users reached 280m, up 22 per cent.
“We are optimistic about the engagement trends we are seeing as the world is beginning to open up,” Spiegel said, adding that as restrictions eased in the US in February, the company saw “inflection points” with users posting short video-clip “Stories” about their lives and using its Snap Map feature to share their whereabouts and activities.
“More recently, we saw a rise in the rate of new friendships and bi-directional communication on Snapchat in late March as people have begun to socialise in broader groups,” he added.
The upbeat set of results benefitted from delays to privacy changes to Apple’s iOS 14 operating system, which will ban app developers from collecting data on iPhone users without their explicit consent in a bombshell update that is expected to be painful for the online ads industry.
The changes were expected to come into force towards the end of last year, but will now arrive next week. Snap, which explored frowned-upon ways to circumvent the rules according to a Financial Times report, said it was “not clear yet” what the longer-term impact of the changes would be.
The company guided year-on-year revenue growth of between 80 to 85 per cent in the second quarter of the year despite the changes – albeit coming from a lower base after the pandemic put a squeeze on Snap’s advertising clients in the second quarter of 2020.
After a troubled 2019, Snap has undertaken a successful turnaround, with investments in its product upgrades and its offering to advertisers paying off. In March, Spiegel told a conference that a previous company forecast of multiple years of at least 50 per cent revenue growth was a baseline achievable even with further growth in user or engagement numbers.