Snap Inc. on Tuesday reported high quarterly revenue and user growth for its Snapchat app, as more people seek entertainment while they stay at home during the coronavirus pandemic.
“We are grateful for the opportunity to serve our community and partners during this difficult time,” said Evan Spiegel, CEO. “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.”
Snapchat said it saw a jump in usage in the last week of March compared with the end of January. Usage also increased for Snapchat’s original content and in-app games.
Daily active users (DAU) on Snapchat rose 20% to 229 million in the first quarter ended March 31, compared with a year earlier. The figure stood at 218 million in the fourth quarter.
Revenue, which Snap earns mainly by selling advertising on the app, increased 44% from a year earlier to $462.47 million. The company said higher revenue in the first two months of the quarter offset lower growth in March, when advertisers began to tighten marketing budgets as non-essential stores closed amid the pandemic.
So-called “direct response” advertisers, or those seeking to increase sales through their ads rather than name recognition, were a bright spot, said Evan Spiegel, chief executive of Snap, during a conference call with analysts. Direct response advertising is now more than half of Snap’s total revenue.
The company said it would shift resources on its sales team to serve advertisers in industries like gaming, home entertainment and consumer packaged goods, which are expected to see higher demand from people stuck at home.
Average revenue per user in the first quarter was $2.02, up from $1.68 in the prior year.
Snap’s net loss declined slightly to $305.9 million, from $310.4 million a year earlier.