CEO points to highest revenue and user growth rates in four years.
Snap Inc. saw revenue more than double in the latest quarter, easily topping expectations amid a continued rebound in the advertising market.
Shares were up 16% in after-hours trading after the company posted second-quarter revenue of $982 million, up from $454 million a year earlier and vastly ahead of the $846 million that analysts tracked by FactSet had been projecting.
The social-media company added 13 million daily average users sequentially in the period, bringing its total to 293 million. The FactSet consensus called for 10 million net additions.
Snap (SNAP) cut its losses in half, posting a net loss of $151.6 million, or 10 cents a share, compared with a loss of $326.0 million, or 23 cents a share, a year earlier.
After adjusting for stock-based compensation and other expenses, Snap surprised with positive earnings per share of 10 cents, whereas it posted a 9-cent loss per share a year earlier. Analysts tracked by FactSet were expecting a 1-cent adjusted loss per share.
"Our second-quarter results reflect the broad-based strength of our business, as we grew both revenue and daily active users at the highest rates we have achieved in the past four years," Chief Executive Evan Spiegel said in a statement.
Snap "benefited from a favorable operating environment and continued success with both direct response and large brand advertisers," Chief Business Officer Jeremi Gorman added on Snap's earnings call.
While the broader social-media industry had previously flagged potential concerns about Apple Inc.'s $(AAPL)$ introduction of App Tracking Transparency, which lets consumers opt out of having their internet activities tracked for advertising purposes, Gorman noted that Snap saw "higher opt-in rates than we are seeing reported generally across the industry."
Still, the rollout of Apple's feature came later than anticipated and users have been slow to perform software updates that would give them the option to control tracking. "This has given us more time with advertisers to navigate the transition but also means the effects of these changes will come later than we initially expected," Gorman continued.
Social-media peer Twitter Inc. (TWTR)also posted upbeat results Thursday were up 3% and 1%, respectively.
The earnings come amid a busy year for Snap, which has seen its stock rise 25% so far in 2021 as the S&P 500 has gained 16%. The company has been capitalizing on a resurgence in the advertising market, especially relative to a more muted landscape in the early days of the pandemic. It has also built up features beyond messaging , which can bring in more revenue.
Daily active users for Snap's Spotlight service, which aggregates user-generated content, rose 49% sequentially in the quarter with average daily content submissions nearly tripling, Spiegel shared on Snap's earnings call. The company's deep history with full-screen vertical video can help Spotlight "transition to monetization really easily," he continued.
Snap has been trying to dive deeper into the world of commerce and announced earlier this week that it struck a partnership with Verishop that will use augmented reality to help consumers explore different fashions. Snap made several shopping-related acquisitions earlier in the year.
"We are continuing to create value for businesses by reimagining the shopping experience through [augmented reality]," Spiegel said on the call. "By leveraging the long-term investments we've made in augmented reality and personalization, we are laying the groundwork for an improved online shopping experience."
For the current quarter, Snap expects $1.070 billion to $1.085 billion in revenue. The FactSet consensus was for $1.014 billion.