Snap Inc, the parent company of Snapchat, has exceeded expectations in the second quarter of 2021 with strong user and revenue growth. The company saw its highest growth rates since late 2017, driven by new features on the app that attracted more users.

Snap’s revenue soared by 116% to $982 million, surpassing analyst estimates. This remarkable growth outpaced the company’s previous strongest growth rate of 66%. The increase in revenue can be credited to Snap’s efforts to promote ad formats on Snapchat that drive sales for advertisers. For example, users can now easily visit a brand’s website by swiping up on a mobile ad, creating a seamless shopping experience.

Although Snap’s performance was impressive, the implementation of Apple’s new privacy controls in April did cause some disruptions to advertiser demand. These controls limit digital advertisers from tracking iPhone users without their consent. Snap’s Chief Business Officer, Jeremi Gorman, noted that it is still too early to determine the long-term impact on the company’s business.

To keep users engaged and attract more advertisers, Snapchat has expanded its app beyond its popular Stories feature. It now includes five distinct parts that encompass media content and viral short-form video clips. This diversification has played a crucial role in driving user growth, as daily active users rose by 23% to 293 million during the second quarter. This surpassed Wall Street estimates and Snap’s previous record of 22% user growth.

Additionally, Snap has heavily invested in augmented reality (AR) technology to enhance user experiences and boost brand sales. The company has developed AR features that allow users to virtually try on makeup or clothes, providing an immersive shopping experience. This innovation has been successful in helping brands increase their sales and engagement with users.

Looking ahead, Snap is optimistic about its future performance. The company projects third-quarter revenue to range between $1.07 billion and $1.09 billion, with daily active users expected to grow by 21% year-over-year to reach 301 million. These projections reflect Snap’s confidence in its ability to sustain its upward trajectory and maintain strong growth momentum.

Snap’s impressive financial results and user growth emphasize the company’s resilience and adaptability. Through continuous introduction of new features, expansion of content offerings, and investment in emerging technologies like AR, Snap has effectively captured and retained the attention of its users while attracting advertisers. As the digital landscape evolves, Snap remains well-positioned to capitalize on emerging trends and solidify its position as a leader in the social media and messaging app industry.

Useful links:
1. Augmented Reality in the Retail Sector
2. Social Media Industry Report