Snap, the parent company of the short-lived messaging app Snapchat, increased its number of daily users and generated more than expected revenue in the third quarter. This service was used by users who use the platform to keep in touch with family and friends the coronavirus pandemic.
In the third quarter, the number of people logging into Snapchat every day was 249 million, an 18% increase over the same period last year.
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"Our focus on creating value for our community and advertising partners is delivering positive results during this challenging time. We look forward to growing our business in the third quarter as we continue to invest in our future for the long term," said Evan, Snap Spiegel CEO in a statement on Tuesday. "Augmented Reality is being rolled out faster than previously expected, and we're working together as a team to take advantage of the many opportunities ahead."
Companies have been more open to experimenting with augmented reality to increase sales as stores are no longer as accessible due to the pandemic, Spiegel added during a conference call with analysts.
Snap has fueled the popularity of augmented reality with camera filters that allow users to transform into an anime character, change their hair color, or add effects to their selfies. Features have also been released to allow users to add AR effects to local buildings and landmarks. One effect, for example, gives the impression that the Capitol is shooting confetti. City Painter feature released in London allows users to create virtual art across the city.
However, Snapchat is also facing competition, including Instagram from Facebook and the short-form video app TikTok. This month, Snapchat launched a feature called Sounds that allows iPhone users to add music to their photos and videos. The company is testing a way for users to add their own sounds to their snapshots. In addition to augmented reality, Snap has also invested in original shows.
Spiegel said during a virtual conference hosted by the Wall Street Journal later on Tuesday that it was impressive to see TikTok's growth. The short-form video app also promotes videos from users who don't have a lot of followers, helping to spread the best content, he said.
Continue reading: Snapchat's latest AR effects work with Apple's iPhone 12 and iPad Lidar
Oracle and Walmart then try to sign a contract with TikTok President Donald TrumpThe administration targeted the short-form video app. Chinese tech company ByteDance owns TikTok and has raised legislator concerns that the app could be used to spy on US citizens. TikTok has announced that it will not provide any data to the Chinese government even if asked to.
Spiegel said Snap couldn't afford to purchase TikTok, adding that "it's a little too expensive for a small company like Snap". Even so, he said, Snap still plans to compete with the app globally. "Snapchat is a very different product than TikTok. We are very focused on visual communication and augmented reality," he said.
Snapchat's performance in the quarter also seemed to benefit from an advertising boycott of Facebook, organized by civil rights groups in July to put pressure on the social network do more to combat hate speech. Verizon, The North Face and Target participated in the boycott, among others.
"When brands and other organizations used this period of uncertainty as an opportunity to evaluate their advertising spend, many brands sought to target their marketing efforts on platforms that shared their corporate values," said Jeremi Gorman, Snap's chief business officer, on a shout Meet with analysts on Tuesday.
Snap had sales of $ 679 million from July through September, beating Wall Street's forecast of $ 556 million. The company posted a net loss of $ 200 million in the third quarter.
The company lost 14 cents per share, which is better than the 18 cents per share loss surveyed by Thomson Reuters. At no cost, Snap lost 1 cent per share, beating the expected 5 cents per share loss.
Snap's stock rose more than 18% in after-hours trading to $ 33.81 per share.
Debra Aho Williamson, principal analyst at eMarketer, said in a statement that Snap offers unique advertising to companies, such as: expanded reality Ads and commercials on video shows. However, analysts believe that user growth will slow if the pandemic continues.
"The early stages of the pandemic resulted in increased engagement from existing social media users and a small number of new users joining the social media properties," she said. "But as the pandemic has progressed, that 'pandemic bump' has subsided and new users for Snapchat (as well as most other social platforms) are increasing."
