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More People Flock to Snapchat During Pandemic, Propelling Revenue Growth

A Snapchat user | Source: Shutterstock

Snap Inc, owner of popular photo-messaging app Snapchat, on Thursday beat analysts’ estimates for both user growth and revenue as the coronavirus pandemic prompted more people to use the app to connect with friends.

Daily active users (DAUs), a metric watched by investors and advertisers, rose 22 percent year-over-year to 265 million in the fourth quarter ended Dec. 31. Analysts had expected 258 million, according to IBES data from Refinitiv.

The app made the biggest gains in regions outside North America and Europe, with 55 percent growth in daily active users.

Revenue, which Snap generates mainly from ad sales, grew 62 percent to $911 million, easily beating Wall Street’s consensus estimate of $857.4 million.

Advertisers have been drawn to Snap’s large base of young users, and the company has invested in developing features that appeal to brands including Snap Map, which lets users find local businesses near them.

“As the global health crisis is addressed and the world begins to reopen, we see opportunities to help strengthen the bonds of the Snapchat community all over the world,” said Snap Chief Executive Evan Spiegel in remarks prepared for release before an earnings call with analysts.

Snap’s net loss narrowed to $113 million, or 8 cents per share, from $240.7 million, or 17 cents per share, a year earlier.

The company forecast first-quarter daily active users to grow 20 percent from the prior-year period to 275 million, and revenue to be between $720 million to $740 million.

Snap said Apple Inc’s planned privacy changes, which will ask iPhone users to consent to personalized ads, could present a “risk” to advertiser demand, but added it was unclear how the changes could affect Snap’s business in the long-run.

By Sheila Dang

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