Snapchat has shared its Q3 2020 earnings, proving once again that if there are any companies that are emerging as winners from the pandemic, it would be tech firms, especially with ad revenue trickling back up.
In this exceptional quarter ending September 30, 2020, Snap saw its daily active users (DAUs) increase by 39 million or 18% year-over-year, to 249 million. The average number of Snaps created every day grew 25% year-over-year. However, Snap did not give an exact tally.
Also of note is the total daily time spent by users watching Shows, Snapchat’s video streaming offering, which increased by over 50% year-over-year in Q3 2020.
Meanwhile, revenue increased 52% year-over-year to $679 million, while operating cash flow improved 28% year-over-year to $(55) million.
“Our focus on delivering value for our community and advertising partners is yielding positive results during this challenging time,” said Evan Spiegel, CEO of Snap. “The adoption of augmented reality is happening faster than we had previously anticipated, and we are working together as a team to execute on the many opportunities in front of us.”
Reasons behind this tremendous success
One of the reasons Snapchat enjoyed such success this quarter is because of the uncertainty of the current social media environment, which is leading brands to look for less controversial platforms to advertise on. Facebook’s content moderation controversies, as well as the regulatory challenges TikTok is currently facing have likely played a hand in Snap’s success, even if the company won’t outright state that. However, Snap’s Chief Business Officer Jeremi Gorman did give an interesting statement that could possibly imply that:
“As brands and other organizations used this period of uncertainty as an opportunity to evaluate their advertising spend, we saw many brands look to align their marketing efforts with platforms who share their corporate values,” Chief Business Officer Jeremi Gorman said in prepared remarks. “This gave us an opportunity to engage with advertisers and agencies in real time to ensure that our existing partners as well as new prospects understood our offering in relation to our values.”
Debra Aho Williamson, principal analyst at eMarketer, told Adweek that “the ad boycott definitely opened up opportunities for Snapchat (as well as TikTok) to have conversations with advertisers who had pulled back spending on Facebook. I believe Snapchat was able to win some business as a result, but I think its growing strength in performance advertising has helped as well.”
Adweek notes that the ban of TikTok in India might have also played a role in boosting Snapchat’s numbers, as the earnings report revealed that the number of users in India watching Discover content increased by nearly 50% during the quarter.
TechCrunch reported that Snap shares were up nearly 20% in after-hours trading, besting analyst expectations on both revenue and earnings per share for the quarter.
Other notable statistics and information from the quarter:
- As of the end of Q3 2020, over 1.5 million Lenses have been created by our community through Lens Studio;
- Snapchat added 2D body tracking technology in Lens Studio, allowing Lens creators to make AR experiences for the full human body;
- The company released Lens Favorites, a new feature that allows users to pin their favorite Lenses for future use, to our Android users;
- The ‘Anime Style’ Lens powered by real time machine learning was engaged with 3 billion times in its first week;
- Snapchat also launched a new feature called Sounds, which allows users to add licensed music to their captured content, in the vein of TikTok.