Snapchat added 13 million daily users in a breakout second quarter, thanks to the viral explosion of a pair of augmented-reality filters that pulled in more than 200 million users in just two weeks. It's a significant boost in traffic that has renewed the company's credibility with advertisers, who are starting to pile into the platform.
On Tuesday, Snapchat shared its second-quarter results, reporting a record high of 203 million daily users, up from 190 million in the first quarter and the biggest jump in audience since 2016. Snapchat ad revenue hit $388 million in the second quarter, an increase of 48 percent year over year.
Snapchat has made significant strides since this time last year when it was reeling from a botched redesign and a declining user base—and overhauled its executive leadership and advertising sales operation. Advertisers have recognized the platform’s new trajectory and have been increasing their spending, according to Aaron Goldman, CMO of 4C, a marketing technology ad-buying platform that plugs into Snapchat.
“Snapchat has had a higher place in the marketing plan for brands than in years past,” Goldman says, talking by phone before Snapchat’s earnings release. Brands that use 4C to buy ads on Snapchat had increased their spending by close to 60 percent year over year in the second quarter, Goldman says.
Snapchat’s stock price increased more than 10 percent in after-hours trading, thanks to the positive results on user growth and revenue. Shares topped $16.
The company had a few pop-culture moments that helped its growth in the second-quarter. In May, a gender-swapping filter went viral and helped Snapchat rise in the app download charts, attracting new users. The augmented reality tool was right in Snapchat’s area of expertise, as it has led the way with that technology being followed by so many bigger rivals, like Facebook and Google.
Snapchat said in its quarterly report that 200 million people tried the gender-swapping filter, and one that turned people into baby faces, within the first two weeks of their debuts. Snapchat said the filters used new artificial-intelligence technology that has the power to quickly render new looks for users to try out in their video selfies.
Now Snapchat is eager to show that the one-off fun of an augmented-reality filter can lead to sustained growth.
“We estimate that approximately 7 to 9 million of the 13 million in sequential [daily user] growth is attributable to an improvement in user engagement that we observed after launching our new augmented-reality Lenses, which brought in new users and re-engaged lapsed users,” said Derek Andersen, Snapchat’s chief financial officer in the company’s quarterly statement.
Andersen said the company was in a good position to retain users who came back or joined for the viral filters because of improvements made to the platform. Snapchat rebuilt its app for Android phones, which had been a major weak spot for the service.