Correction: This story originally reported Snap lost $355 million in Q2, which was incorrect. Snap’s Q2 net loss was $325 million.
Snapchat added 9 million new users during the second quarter and topped Wall Street’s revenue estimates, but Snap’s stock still dropped 11% in after-hours trading after the company posted its Q2 financial report.
The new users push Snapchat to 238 million overall, up 17% year-over-year. Analysts had anticipated Snapchat would add somewhere between 9-10 new users. Snap, in its letter to shareholders, said users opened the app 30 times per day during Q2 on average.
The Los Angeles-based company posted a loss of 9 cents per share — matching analyst estimates — and reported $454 million in revenue, surpassing estimates of $438 million. Sales increased 17% from the same time last year, indicating Snap’s ad business was able to weather the overall ad downturn brought on by the coronavirus pandemic, at least during the second quarter.
That may be more difficult moving forward, though. Snap said its revenue is up 32% year-over-year so far in Q3, leading CFO Derek Anderson to say the company is “cautiously optimistic.” But Anderson also warned several factors, like the lack of advertising tied to back-to-school shopping and box office releases, could dent Snap’s ad revenue this quarter.
Snap’s Q2 net loss was $325 million, compared to a loss of $255 million during the second quarter of 2019.
“We continued to grow our community and business in a challenging and uncertain environment,” Snap CEO Evan Spiegel said in a statement. “I am proud of our team for innovating on new experiences for our community and driving value for our partners, demonstrating the importance of our service in people’s lives. We are grateful that the resilience of our business has allowed us to remain focused on our future growth and opportunity.”
Despite the revenue beat, Snap shares fell 11% a few minutes after the company shared its report, hitting $22 per share.
Like several other tech companies, Snap had been on a big Wall Street run over the last few months. Heading into Tuesday’s closing bell, Snap shares had jumped 48% since early May.
To keep users engaged, Snap has doubled down on original shows and games over the last year. TheWrap reported last month that time spent watching Snapchat shows had doubled in the last year, thanks to new series like “Will From Home,” starring Will Smith, pulling in 35 million viewers since it launched in early April.
Still, it wasn’t all roses for Snap in Q2. Most notably, the company had to pull down a racially insensitive Juneteenth filter last month; The filter, featuring the Pan-African flag in the background, prompted users to smile to break computer-generated chains.
Looking forward, Snap declined to share guidance for Q3, pointing to “uncertainties related to the ongoing COVID-19 pandemic” and “rapidly shifting macro conditions.”
Snap’s executives will hold a call at 2:00 p.m. PT to discuss the company’s Q2 results.