(Reuters) – Snap Inc on Thursday beat analysts’ estimates for both user and quarterly revenue growth and notched the highest growth rates since late 2017, as new features on its messaging app Snapchat attracted more users.
Snapchat, known for its Stories feature that lets users post updates that disappear after 24 hours, has grown its app into five distinct parts spanning media content and viral short-form video clips in an effort to keep users engaged and draw in more advertisers.
Daily active users rose 23% to 293 million during the second quarter ended June 30, beating Wall Street estimates of 290.3 million, according to IBES data from Refinitiv. User growth topped the company’s prior best of 22%.
Snap’s revenue jumped 116% to $982 million, beating analyst targets of $845.9 million. Previously, the company’s 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.
New privacy controls implemented by Apple Inc in April, which are 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, though she added it was too early to tell the long-term impact on Snap’s business.
Snap has also invested heavily in augmented reality technology to help users virtually try on makeup or clothes, for example, in order to help brands increase sales.
The Santa Monica, California-based company forecast third quarter revenue to be between $1.07 billion to $1.09 billion, and daily active users to grow 21% year-over-year to 301 million.
(Reporting by Sheila Dang)