Snapchat reported better-than-expected revenues and strong user growth in its Q2 2020 earnings call Tuesday. Revenues rose 17% year over year to $454 million, and the number of daily active users also increased 17% year over year to 238 million. 

Snapchat app social media language change

The Snapchat app is currently available in 22 languages.

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Here are the most important things marketers should know: 

  • Direct response is paying the bills. Snap said performance advertising is driving its current growth, while brand advertising is starting to recover. Dynamic ads, rolling out globally, are one part of that; they will enable ecommerce companies to upload their entire catalog and optimize their advertising, similar to what they already do on Facebook and other platforms. 
  • The pandemic’s effect on user gains has ended. Between Q1 and Q2, Snap added 9 million daily active users, but its total of 238 million was under the 239 million it had previously estimated. During the earnings call, Snap said it expected to add only 4 million to 6 million users in Q3. (In Q1, it added 11 million.) Snap CFO Derek Andersen said that the initial lift in user count at the start of the pandemic “dissipated faster than we anticipated as shelter-in-place conditions persisted.” The app likely got an initial boost from people who were stuck at home and looking for something to do, but it seems the growth ceiling was lower than Snap had thought.
  • Without big Q3 events to bolster ad dollars, Snap will have to remain laser focused on proving itself to the advertisers it has won during the pandemic. There’s cautious optimism among marketers and digital publishers that the worst of the pandemic’s economic impact is over, but there’s also plenty of uncertainty as cases rise again in the US. With many of the traditional Q3 tentpole events — summer blockbuster movie launches, back-to-school, the start of the NFL season — already shelved or in limbo, Snap has less low-hanging fruit to rely on. It will need to focus on keeping its current slate of digitally-focused advertisers (such as gaming, streaming services and ecommerce, which Snap said were important categories in Q2) happy.
  • Creative formats will help. Snap has always been on the leading edge of social media advertising, and its aggressive push into augmented reality advertising is garnering strong approval from marketers. It remains well ahead of competitors like Facebook and Instagram on this front (watch for our full report about augmented reality in social media later this quarter). 

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