The current coronavirus pandemic did not hamper Snapchat's performance at all. In the first quarter of the year, the company registered significant growth in viewership and revenue as millions of isolated people used the app due to the government-imposed lockdown.
Snapchat also added new features such as more original content, enhancing its games, and adding augmented reality lenses. Optimizing their product allowed the company to cope with the current coronavirus pandemic.
The health crisis also allowed the company to entice more people to use their app for a longer period of time than usual. The first-quarter figures showed that Snapchat reaped the benefits of its strategy.
In a report from The Verge, Snapchat recorded a massive growth in its daily active users with 11 million in the first quarter of the year. The figure is higher compared to the first quarter of 2019 and by 20 percent year on year.
Viewership and revenues soar
For the same period, 60 Snapchat shows were watched by more than 10 million viewers. A Snapchat Original, which debuted in March, hit a viewership of over 20 million.
Likewise, usage of the app as a communication tool soared by at least 30 percent in the last week of March compared to the same period in January. Areas that are greatly affected by coronavirus recorded the most significant jump in users with more than 50 percent compared to the pre-pandemic period.
"We've done a lot of work to make our infrastructure extremely efficient. We've been able to hold the line on our cost per daily active user," Snap CFO Derek Andersen told ZDNet.
The average time spent on Snapchat increased by over 20 percent in the last week of March compared to the last week of January, with as high as a 30 percent increase in some markets like France and the UK.
In terms of revenue, the multimedia messaging app gained $462 million in the first quarter of the year. It was a 44-percent jump compared to the same period last year. Although, the Q1 2020 earnings are still lower as compared to the revenue generated in Q4 2019.
Although the Q1 performance offered some good news for the company, still, Snapchat's lifeblood is its ads. And amid the current pandemic, it will prove to be a great challenge to compete for hard-to-come-by ad earnings. The company is competing with Google, Facebook, and Twitter for advertising dollars.
But as brands tighten their budgets, it will be challenged by Snapchat to compel advertisers to spend on its platform compared to Google or Facebook, which has more audience reach.
Forecast in the upcoming quarters
Andersen declined to give a Q2 forecast for the company, given the many uncertainties businesses face due to the coronavirus pandemic. But he hinted that they are expecting that expenses will continue to grow driven by the infrastructure costs brought by higher engagement.
Snapchat chief business officer Jeremi Gorman told The Verge that their sales teams are focusing on brands that potentially could increase their business because of the pandemic, including "gaming, home entertainment, eCommerce, and consumer packaged goods."
"Our sales teams have been focused on helping our brand partners craft thoughtful messages and create valuable experiences for Snapchatters during these difficult times," Gorman said in the report.
She added that they are forging a partnership with brands on the best way to communicate with the Snapchat generation. And helping the app's users discover new products and services as they spend more time online.
