Snap 1Q daily active users, revenue top expectations

Snap (SNAP), the parent company of photo-sharing app Snapchat, reported first-quarter user growth that exceeded consensus expectations, as stay-in-place orders amid the coronavirus pandemic contributed to heightened user activity.

Here were the main results from the report, compared to consensus estimates compiled by Bloomberg:

• Revenue: $462.5 million vs. $420.8 million expected

• Adjusted loss per share: 8 cents vs. 8 cents expected

• Daily active users (DAU): 229 million vs. 223.8 million expected

• Average revenue per user (ARPU): $2.02 vs. $1.87 expected

Wall Street anticipated mixed results from Snap as the coronavirus pandemic and social distancing measures contributed to shifts in both user and advertiser behavior. User engagement was expected to rise as more people stayed at home and turned to digital pastimes. But advertising revenue was expected to weaken, as business activity crippled by the outbreak forced companies to cut down on ad and marketing costs.

In a note published last week, Cowen analyst John Blackledge said he expected U.S. ad revenue would drop 11% over last year to $212 billion in 2020, with this decline rippling across a host of digital ad-dependent companies including Facebook (FB), Alphabet (GOOG, GOOGL), Snap (SNAP) and Twitter (TWTR). Still, Blackledge said Snap was “well positioned to gain market share over time given positive secular trends, strong engagement and low ARPU” relative to other social platforms.

Snap could also see longer-term strength following the roll-out of its revamped Android app across more geographies, improving the user experience and driving engagement across a broader base, according to Credit Suisse analyst Stephen Ju. Plus, Snap is “a scarce asset that offers advertisers access to a coveted younger demographic,” he added.

Snapchat was the “favorite” social media platform among teens, edging out contenders including Facebook-owned Instagram, TikTok, Twitter and Pinterest, according to an April report from Piper Sandler surveying 5,200 individuals with an average age of 16.2 years. Snapchat was second to Instagram in frequency of usage, according to the report.

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Shares of Snap were down about 22% for the year to date, underperforming against the broader market’s 14.6% decline.

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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter: @emily_mcck

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