Snap Inc appears to have truly left its woes behind after reporting blowout Q2 earnings, helped by a lower-than-expected iOS 14 impact.
When it comes to social media companies, it’s hard not to focus all of the attention on the likes of Facebook and Twitter – though usually for the wrong reasons.
However, Snap Inc’s (NYSE: SNAP) Q2 earnings prove, if it was ever needed, that it is a serious contender in the space.
Snap’s still got plenty to give
Not too long ago it seemed that Snap (and Snapchat) were going to fade into mediocrity or be acquired. Its share price had more than halved since going public in 2017 and user growth was stagnating.
Then COVID-19 hit, and Snap started to kick things up a notch by investing deeply in augmented reality (AR) and making itself more user-friendly.
Fast forward to now and Snap is up almost 190% in the past 12 months, while revenue and users are at an all-time high, as seen in Q2:
- Adjusted EPS: $0.10 vs. -$0.01 expected.
- Revenue: $982 million vs. $846 million expected.
- Global daily active users (DAUs): 293 million vs. 290.3 million expected.
- Average revenue per user (ARPU): $3.35 vs. $2.92 expected.
- Net loss: $152 million, down 53% from $326 million a year ago.
No wonder its share price is up almost 20% pre-market this morning.
And there’s another very important aspect to address: iOS 14.5.
The infamous Apple update is expected to have a devastating long-term impact on media sites that rely heavily on tracked advertising due to its opt-out feature for all iOS devices.
Although Snap does expect the impact to be felt at some point, it pointed out that it was also experiencing higher opt-in rates than what we are seeing reported generally across the industry. This has been attributed to the trust Snapchat users have in the business.
It’s an exciting time for Snap, and investors should keep a close eye on its development throughout the rest of the year, and whether it can maintain its growth despite iOS 14’s impact.
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