Snap, the parent company of Snapchat, beat Wall Street financial estimates for the first quarter — and added 15 million daily users for the app, over its previous guidance.
Snapchat had an average of 280 daily active users in Q1, up 22% from 235 million in the year-ago quarter (when year-over-year user growth was 20%). Snap had estimated that DAUs would reach 275 million in Q1.
In March, the company said, over 125 million Snapchatters used Spotlight, the user-generated content section that presents videos in a personalized, TikTok-like feed. Also during the quarter, Snap launched Spotlight in three new countries — India, Mexico and Brazil — making it live in a total of 14 countries.
Snap’s revenue grew 66% to $770 million in Q1, while adjusted EBITDA was a loss of $287 million. On a diluted per-share basis, the company said it broke even.
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“We began 2021 by achieving our highest year-over-year revenue and daily active user growth rates in over three years during the quarter, and delivering positive free cash flow for the first time in Snap’s history as a public company,” said Evan Spiegel, CEO. “The strength of our business underscores our relentless focus on product innovation and is a testament to our team’s ability to execute well together over the long term.”
Snapchat users who submit videos to Spotlight, which debuted last November, are eligible to get a cut of more than $1 million in daily payouts, based on engagement with their content (with a minimum threshold of $250 per user). The company notes that “only a small percentage of creators” will receive payments.
At its first-ever analyst day in February, the company said it expects to achieve revenue increases of at least 50% annually over the next several years, which CEO Evan Spiegel said doesn’t factor in growth assumptions for Snapchat’s user base.
Analysts on average expected Snap to report Q1 revenue of $743 million and an adjusted net loss of 5 cents per share. The company had already lowered expectations: In reporting fourth-quarter 2020 earnings, Snap projected Q1 revenue would be $720 million-$740 million.