Snap DAUs fall short of expectations and losses rise 28%

Anne Freier | July 23, 2020

App Business

COVID-19 lockdowns didn’t pan out quite as well for Snapchat as the app had hoped.

According to its latest earnings results, Snapchat daily active users were short of Snap’s own predictions, reaching 238 million during Q2 2020, an increase of 17% or 35 million. Despite the positive rise in user figures, the company had previously estimated DAUs to reach 239 million.

Meanwhile, revenues rose 17% to $454 million from $388 million the previous year, above estimates.

However, losses at Snap increased shortly at $326 million for Q2, jumped 28% from $255 million in 2019.

This sent stocks flying by more than 11% levelling out at 6% toward the end of the day.

“Despite a widening net loss in Q2, Snap’s daily active user count and revenue were both up 17 per cent year-on-year which is pretty remarkable given the pandemic and economic crisis,” Aaron Goldman, Chief Marketing Officer at 4C Insights remarked.

“This growth goes to show just how much the platform is picking up steam with consumers and advertisers alike. Looking ahead, with new innovations like Snap Minis and Brand Profiles, we expect further adoption and engagement. These features will provide more commercial intent and targeting signals in the Snap ecosystem heading into the golden quarter. Clearly the imperative for marketers is to implement an agile and omnichannel advertising playbook anchored by modern system of record software.”

Yuval Ben-Itzhak, CEO at Socialbakers, added that the platform has yet to capitalise on the lockdown compared to its competitors such as Facebook and Instagram. But the good news is that “Snap’s competitors are facing immense challenges: its biggest rival for younger audiences, TikTok, is facing tough headwinds in the US, with talks about the platform being banned due to espionage concerns. Meanwhile, Facebook and its family of apps are still weathering the storm of an advertising boycott. This could be a chance for the platform to capitalise on its recent innovations and grow its audience size and its appeal to advertisers.”

“However, Instagram’s imminent launch of Reels in the US market, a rival to TikTok capitalising on the content format of the moment, is likely to pose a threat to Snap’s ambitions. With more than 1 billion monthly active users on Instagram, Snap can’t come close to offering the scale of Facebook’s family of apps. It’s differentiation and innovation that will keep Snap thriving in Q3 and beyond.”

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