Snap topped Wall Street estimates on the top and bottom lines in the first quarter of 2019 — and the still-unprofitable company managed to show an uptick in Snapchat users for the first time in a year.
Revenue for the quarter was $320 million, up 39% year over year, while it narrowed its net loss to $310.4 million in Q1 2019 (an adjusted loss of 10 cents per share) vs. $385.9 million in the year-earlier period.
Analyst consensus estimates for Snap’s Q1 were for revenue of $306.5 million and an adjusted net loss of 12 cents per share. Snap shares rose as much as 8% in after-hours trading Tuesday on the results but later fell to around +1%.
Snapchat’s daily active users were 190 million in Q1 2019 — up 4 million, or 2%, from 186 million in the prior quarter, but down from 191 million in Q1 2018. In North America, the messaging and media service’s DAUs were 80 million (up from 79 million in Q4 and down from 81 million in the year-earlier quarter).
Snapchat had ended 2018 with 186 million daily active users, flat sequentially and down 1 million versus the end of 2017.
Three weeks ago, at its first partner summit in L.A., Snap announced several initiatives designed to spur growth and broaden its reach. Those include a new games platform; the ability to let third-party apps give their users the ability to create Stories from Snapchat; an ad network to bring Snapchat ads to third-party apps; and a new slate of original shows from BuzzFeed, New Form and others.
“In the first quarter we delivered strong results across our business with growth in daily active users and revenue,” Snap CEO Evan Spiegel said in a statement. “This month we announced several new products that we believe will drive further engagement and monetization. As we look towards the future, we see many opportunities to increase our investments, and will continue to manage our business for long-term growth.”
According to Spiegel, as of March, Snapchat ads can now reach 75% of U.S. consumers 13-34 — more than Instagram.
In addition, Snap by the end of Q1 had widely launched its revamped Android application for Snapchat “with promising early results,” according to Spiegel. On some of the “lowest performing” Android devices, the new app produced a 6% increase in the number of people sending snaps within the first week of upgrading. Compared to the prior version, he said, the Android rebuild is 25% smaller, opens 20% faster on average, and is modularized to allow for “efficient ongoing innovation.”
In a nutshell, “this is the price of admission to international markets,” Spiegel said about the Android app rebuild, on Snap’s earnings call.
In discussing the new Snapchat Landmarkers augmented-reality feature — which lets users interact with real-world landmarks — Spiegel called out the company’s deal with HBO, which bought a sponsored AR lens to promote “Game of Thrones” in which a zombie dragon lands on New York City’s Flatiron Building.
Snap said that in Q1 2019, the Snapchat Discover section now includes more than 450 content channels. Nearly half of its daily Discover viewers watched Discover seven days per week in the quarter, the company said. In addition, Snapchat content partners in March increased their total mobile monthly audience in the U.S. by an average of more than 30% just by publishing to Discover, according to the company (citing comScore research).
Average revenue per user was $1.68, up 39% year-over-year and down 19% sequentially (reflecting seasonality in the business). Total ad impressions were up 155% year-over-year and 6% sequentially, while pricing was down 42% year-over-year and down 22% driven primarily by an increase in supply.
Also on the earnings call, Jeremi Gorman, Snap’s chief business officer, said the company reorganized its U.S. advertising team as of April 1 to have a “more scalable structure” and is extending that to its international ad group. The Snap ad groups are organized into three teams: enterprise (large brand advertisers), emerging advertisers and direct-response clients. “While we expect some disruption to our near-term business, we are confident that this is the right long-term structure,” she said.
For the second quarter of 2019, Snap said it expects revenue to be $335 million-$360 million (up 28%-37% year-over-year) with loss before interest, taxes, depreciation and amortization of $150 million-$125 million (versus EBITDA of -$169 million in Q2 2018).
Snap, of course, calls itself “a camera company,” not a social networking or messaging service. “We believe that reinventing the camera represents our greatest opportunity to improve the way people live and communicate,” the 7-year-old company’s mission statement reads.