Snap Inc. will report second quarter 2019 earnings July 23, and analysts and shareholders expect the company’s finances to continue improving, partly helped by what experts see as the company’s renewed efforts to grow and engage its user base and sell advertising.
Snap reported $320 million in revenue for the first quarter and estimated at the time that second quarter revenue would hit between $355 million and $360 million, a gain of up to 37% compared to the same period a year earlier.
The company has beat analyst expectations on earnings the last four consecutive quarters.
“We see Snap at a distinctly possible inflection point due to Android platform improvements and new features that could boost engagement,” RBC Capital Markets analyst Mark Mahaney wrote in a recent report.
Snap’s revenue stream appears to be recovering, and its losses have decreased over the last year as the social media technology company has worked to retain and profit from daily active users. Snap posted a loss of $310 million in the first quarter.
Goldman Sachs analyst Heath Terry wrote in a July 15 report that Snap users are averaging 10% more time on the platform per day, which is key for the company’s advertising strategy.
User engagement with the Snapchat app in both the United States and internationally has been slowly growing after a steep drop in the fourth quarter of 2018 when users became dissatisfied with the app’s redesigned platform.
The more engaged users are with the application, the more Snap stands to profit from advertising — its primary source of income for the free Snapchat app.
Snap launched a push into gaming in April with its multiplayer “Snap Games” platform, recruiting San Francisco-based mobile game developer Zynga Inc. and several other publishers. The third-party games are monetized in the same way as Snap’s third-party video content, with six-second commercials that users can’t skip.
“We announced several new products that we believe will drive further engagement and monetization,” Snap Chief Executive Evan Spiegel said in an April earnings statement. “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,” Spiegel added.
Snap posted annual revenue last year of $1.18 billion and reported a net loss of $1.25 billion.
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