Snap Inc.’s concerns it would get off to a slow start in 2021 look to be misguided, with the Snapchat parent company reporting it added 15 million new users in Q1 and topped Wall Street’s sales estimates in the process.
Snapchat’s user gains pushed the app to 280 million daily active users overall, up 22% from the same time last year. The 15 million new users marked the second-best quarter for Snap in terms of total users added since going public in early 2017. (The company added 16 million users between October and December last year, which was a company record as a public company. The company’s best quarter ever was 21 million users added during Q2 2016.)
Snap also posted revenue of $769.6 million — up 66% year-over-year — which easily topped analyst estimates of about $741 million. The company said it broke even, while analysts heading into Thursday afternoon expected Snap would lose 5 cents per share.
And perhaps just as noteworthy on the financial side, Snap’s free cash flow reached $126 million in Q1 — making it the first quarter of positive free cash flow for Snap since it went public.
“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,” CEO Evan Spiegel said in a statement. “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.”
Longtime Snap followers may have noticed another interesting note in the company’s letter to shareholders: For the first time ever, the majority of Snap’s daily users came from Android, rather than iPhone. Only a few years back, users complained Snap’s Android app was clunky and second-rate compared to its iPhone counterpart; the bad reviews ultimately forced Snap to revamp its Android app in 2018.
Snapchat’s new Spotlight tab, which highlights user-generated snaps, looks to be gaining traction, too, with the company saying 125 million people used Spotlight in March. Spotlight launched in late 2020, with Snap paying out $1 million per day to the users who have their pictures and videos added to the tab.
Snap’s Q1 performance stands out after the company’s top brass warned investors in February it may get off to rough start in 2021. CFO Derek Andersen said in February “we started the quarter slower than we would have otherwise expected,” with some advertisers pausing their campaigns for two weeks following the Jan. 6 Capitol riot. On top of that, Andersen said it was “not clear” how changes to the iPhone’s operating system would hurt its ad business.
Snap’s share price jumped 4.6% in after-hours trading on Thursday to $59.65 per share. (Snap opened the year at about $50 per share and ran to a record closing high of $70.45 per share in late February.)