Snap narrows second-quarter loss on rising daily active users

Company's sales surged 116% to $982m in three months to June 30

People take pictures in front of the Snapchat headquarters at Venice Beach in Los Angeles. Bloomberg

Snap, the company that owns social media platform Snapchat, narrowed its net loss 53 per cent to $152 million in the second quarter from a $326m loss in the same period a year ago as revenue soared and daily active users increased.

Revenue surged almost 116 per cent to $982m, beating the $846m average analyst estimate.

“Our second-quarter results reflect the broad-based strength of our business as we grew both revenue and daily active users at the highest rates we have achieved in the past four years,” said Evan Spiegel, Snap's chief executive.

“We are pleased by the progress our team is making with the development of our augmented reality platform … and we are energised by the many opportunities to grow our community and business around the world."

Snap’s operating cash flow rose more than 50 per cent on an annual basis to $101m between April and June.

The company’s free cash flow was $116m in three months to June 30, compared to $82m in the same quarter last year.

Snap’s daily active users numbered 293 million in the second quarter, a year-on-year increase of 55 million, or 23 per cent. It passed analysts’ expectations of 290.3 millions.

The average revenue for each user was $3.35 against the $2.92 average estimated by analysts polled by StreetAccount.

The company said daily active users increased "sequentially and year over year in each of North America, Europe and the rest of the world" on iOS and Android platforms.

Snap defines daily active users as registered users who open its Snapchat application at least once in a 24-hour period.

Snap’s adjusted earnings before interest, taxes, depreciation and amortisation, or Ebitda, improved 223 per cent yearly to $117m in the second quarter.

In its future guidance, Snap expects its revenue to hover between $1.07bn and $1.08bn, increasing in the range of 58 per cent to 60 per cent annually, in the third quarter.

This is down compared to the 116 per cent annualised revenue growth it posted in the second quarter.

It expects daily active users to reach 301 million and an adjusted Ebitda between $100m and $120m in the three months to September 30.

Snap said it spent $370.6m on research and development in the second quarter, a yearly increase of almost 42.1 per cent.

“We invested and innovated in our camera and augmented reality platforms," the company said.

"We improved several try-on capabilities with Lens Studio 4.0, including multi-person 3D body mesh, advanced cloth simulation and a new visual effects editor for more realistic lenses."

It also introduced the connected lenses feature, enabling users in different locations to interact with each other through AR.