In the third quarter of 2020, Snap saw impressive increases in user base and revenue, exceeding internal expectations after six months of quarantine in the US.
The social media company had 249 million daily active users, up 18% from 210 million in the same period last year. Snap also had sales of $ 679 million, up 52% from the third quarter of 2019.
Snap has attracted 11 million new daily users and $ 225 million in additional revenue since the last quarter.
In prepared remarks, CEO Evan Spiegel attributed Snap's revenue growth to "the substantial value we are generating for both direct-reply and branded advertisers in this prolonged period of uncertainty." He also pointed out the company's commitment to augmented reality, which is starting to pay off.
"Augmented Reality is being rolled out faster than previously expected and we're working together as a team to take advantage of the many opportunities ahead," said Spiegel.
Snap may have been the beneficiary of advertising dollars provided by Facebook. A massive advertising boycott broke out in July in protest of the company's policies and hate speech enforcement. The rising social video giant TikTok also faced enormous regulatory pressure in the US when the Trump administration tried to ban it.
"As brands and other organizations used this period of uncertainty as an opportunity to evaluate their advertising spend, many brands have sought to target their marketing efforts on platforms that share their corporate values," said Jeremi Gorman, chief business officer, in prepared remarks. "This gave us the opportunity to get in touch with advertisers and agencies in real time to ensure that our existing partners as well as new prospects understood our offer in terms of our values."
According to Gorman, Snap's sales team had "many productive C-level conversations" during the quarter about brand safety and ROI. She previously said the Facebook boycott "opened" the door to these conversations between Snap and advertisers.
In India, there is now reason to believe that the government's recent TikTok ban, which was successful unlike the US, also helped Snap. In the subcontinent, viewership of Snapchat Discover content has increased nearly 50% since the last quarter, Spiegel said.
When asked if these trends were due to Facebook and TikTok's struggles, a Snap spokesperson declined to comment, referring Adweek to the public statements made by executives.
Debra Aho Williamson, principal analyst at eMarketer, said that Snap's successes stemmed from its direct response advertising business and augmented reality ads, as well as ads in its original programming.
However, she added that it was "but not entirely surprising" that most of Snap's user growth is taking place outside of North America and Europe.
"The ad boycott definitely opened up an opportunity for Snapchat (and TikTok) to have conversations with advertisers who had withdrawn from spending on Facebook," Williamson told Adweek. "I think that helped Snapchat win a business, but I think its growing strength in advertising has helped too."
Williamson said she expected similar slowdowns in Facebook and Twitter earnings reports next week.
"Advertisers like ecommerce companies, mobile app developers, and tech companies rely heavily on performance advertising. As they want to reach audiences across the social landscape, real estate like Snapchat is becoming increasingly important," she continued.
Snap CFO Derek Andersen said while fourth-quarter spending remains uncertain, he expects revenue to grow 47-50% year over year for the final quarter of the year. The company also expects 257 million active users per day, which would mean 8 million new users in the quarter.