Snap Inc. on Tuesday reported the quarterly revenue and user base growth for its Snapchat app. And in line with the ongoing trend for social platforms, the numbers showed a significant increase from what analysts had predicted.
Snapchat reported a surge in user traffic as people increasingly turn to social platforms to stay connected to their loved ones. The platform reported 229 million daily active users (DAU) in the first quarter, up by 20% compared to a year earlier. DAU stood at 218 million in the last quarter of the previous fiscal year. As a result, Snap Inc. reported a 20% jump in shares to $14.93.
The company also said, that it has seeing an increased level of engagement among users with augmented reality. As many as 75% users are engaging daily on an average. These are encouraging signs and offer the company a chance to further evolve existing products. At the end of Q1 2020, over 900,000 Lenses had been created by Snapchat’s community through Lens Studio, up from over 700,000 at the end of Q4 2019.
Driven by the surge in user traffic, revenue also increased by a significant 44% from a year earlier to $462.47 million, comfortably bettering the $428.80 million mark analysts had predicted. Although Snapchat reported lower growth in ad revenue for the month of March as advertisers began to cut on marketing budgets, higher revenue in the first two months more than made up for that decrease.
In terms of other financial numbers, the company’s operating cash flow has shown a significant 94% increase, improving by $72 million to $6 million in Q1 2020, compared to the prior year. Free Cash Flow improved by $73 million to $(5) million in Q1 2020, compared to the prior year. Snap Inc. will also be refraining from issuing guidance for the next quarter, given the uncertainty caused by the coronavirus.
Given the current scenario, Snapchat is mulling shifting resources from its sales team to serve advertisers in industries like gaming, home entertainment, and consumer packaged goods, which are sure to see the surge in user base for some time now.
“These high growth rates in the beginning of the quarter reflect our investments in our audience, ad products, and optimization, and give us confidence in our ability to grow revenue over the long term,” Evan Spiegel, chief executive of Snap said.