Rewind a couple of years, and something seemed to be very wrong with Snap Inc.
In 2018, its Android app didn’t work very well, which is a clear problem when more than two-thirds of the world doesn’t use an iPhone. The reform plan collapsed and staff emigration took place, including senior executives such as Imran Khan, a former strategy director who set out to start launching the online store. Instagram had swept its stories worked and enhanced it, reducing Snapchat’s attractiveness. Meanwhile, the recently public company lost the performance milestones it promised on Wall Street, frustrating observers who can help control the overall perception of the stock and influence stock performance. And for a while, those stocks seemed to be stuck in an unlimited nose. Upon entering the public market at $ 27 per share in March 2017, Snap shares fell below $ 6 by December 2018.
Things could not feel more different at the moment. Snap stock trading is now at a record high: $ 77 per share as the company announced its second-quarter earnings on Thursday night. As a result, the praise for Wall Street has been full. The “monster” quarter, concluded John Blackledge of Cowen. “Great power around,” Ygal Arounian wrote in a note to clients analyzing Snap’s results. Snap’s CEO Evan Spiegel himself seems quite satisfied. “We are excited about the huge opportunity for our business in 2021 and beyond,” he said in a conference call with analysts.
Where Snap once offered disappointment, it now exceeds expectations: Quarterly revenue rose 116% year-over-year to $ 982.1 million, 16% more than Wall Street had predicted. The company continues to see significant growth in its core market in North America, where sales rose 129% to $ 701.7 million. (As it ages, the company often brings hopes for growth in foreign markets.) In Europe, sales doubled to $ 152.3 million. Snap sees strong demand from advertisers and has been able to raise prices in parts of developed countries that pay higher prices.
Another important factor – daily active users – also increased significantly. The company had 293 million such users during the second quarter, an increase of 23 percent. To get back to Bad Old Days: When Snap reported its second-quarter results in 2018, its data showed it to be lose users, a 1.5 percent drop to 188 million.
To get users, Snap has placed great emphasis on augmented reality and TikTok rival Spotlight. Currently, Snap’s AR mainly allows users to add photo filters and overlay images in their posts, and about 200 million are dealing with Snap’s AR technology on a daily basis, the company says. But the company sees a bigger role for AR and is working to create technology that would allow people to shop in practice, maybe see themselves in a shirt or what a chair would look like at home. In a conference call on Thursday, Jernap Gorman, Snap’s business director, summed up the opportunity concisely: “Brands really had to find a replacement for malls and showrooms.” (Also included is Snap’s latest attempt at AR-powered eyeglasses, its eyeglasses, which it announced at a corporate conference in May.)
For Spotlight, the company said that the daily time in that part of the app increased by 60%, but did not provide anything more specific. Snap found the details of Spotlight more vague than before, offering growth percentages instead of exact figures. One thing is for sure: It doesn’t throw quite as much money as Spotlight. It had been in the funnel A million dollars a day for Spotlight, which distributes funds to users with the most popular videos. But it has changed its approach and spent $ 76 million on Spotlight in the fourth quarter, down about 15% from the previous quarter.
Spotlight has so far been the leader of the loss, which is meant to keep TikTok at bay. The company has not yet started selling ads in Spotlight, although it is likely to start doing so soon. Spotlight creates a completely different part of the app where users are encouraged to interact with unfamiliar content, not just messages from their friends. “The spotlight,” Spiegel explained Thursday, “has really opened up a whole new fabric for us to explore this way of sharing content and helping people find things.”