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New AR lenses help Snapchat boost user growth

Shares in the owner of Snapchat have risen sharply after it reported better than expected user numbers and revenue growth.

Snap said the app had benefited from a better version of its Android app and the launch of new augmented-reality (AR) photo lenses.

The number of daily active users rose to 203 million in the second quarter, up from 190 million in the first three months of the year and higher than an average analysts' estimate of 192 million.

Revenues – which it earns from advertising on the app – jumped by 48% to $388m.

Shares rose 9% in after-hours trading on Wall Street.

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Snap had been struggling last year with declines in user numbers but returned to growth in the first quarter of 2019.

The app has been largely untouched by privacy issues plaguing the likes of Facebook and YouTube – rivals for digital advertising sales – because of its disappearing messages.

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Snap continues to be loss-making, though its losses narrowed in the second quarter to $255m compared to $353m a year earlier.

The popularity of the app's AR photo lenses – filters that can overlay everything from bunny ears to freckles onto a user's photo – have been boosted by the introduction of a lens that lets users switch their genders in photos.

Chief executive Evan Spiegel said: "The popularity of these lenses drew millions of people into our rebuilt Android application, where they experienced the new and improved Snapchat that led to increased engagement."

Snap has also being investing in content for Discover, the part of the app that houses original shows and content from media partners – with the aim of increasing the amount of time spent on Snapchat.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Snap's had two questions to answer in recent times.

"Can it hold onto its audience and can it attract advertising dollars? The second quarter showed promising trends on both fronts.

"The launch of a new Android app seems to have given customer numbers the shot in the arm they needed, while custom designed Discover content is going from strength to strength.

"This short form content is split between Snap Originals and major third parties like ESPN, and seems to be resonating with Snap's generally younger audience."

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