Snap, the parent company of popular messaging app Snapchat, yesterday reported a 5% increase in revenue for the third quarter, ending 30 September 2020. This follows two consecutive quarters of declines due to the impact of the war in the Middle East on the digital advertising market. The company's net loss for the quarter was $368 million, wider than the loss of $360 million reported a year ago.
Snap is primarily used as a messaging platform, and the company is working to monetize its users by introducing ads in features like Stories and Spotlight, scrollable feeds of photos and videos from creators. Last month, it partnered up with Microsoft to include ads in the form of sponsored links in Snap's AI chatbot My AI.
The company has invested heavily in improving ad ranking and optimization using machine learning models, leading to a significant improvement in ROI for advertisers and an increase in lower-funnel revenue year-over-year and quarter-over-quarter. It has also introduced the Event Quality Score (EQS) system for advertisers to measure the quality and integrity of their data and identify opportunities to optimize their integrations with the ad platform.
Daily active users for the third quarter were 406 million, up 12% from a year ago. Last month, Snap said it had reached five million users for its paid subscription services, up from 4 million in June. CEO Evan Spiegel said in yesterday's analyst call that while My AI is just getting started, it will eventually be a revenue driver.
Despite the positive news, CFO Derek Andersen cautioned the ad market remains volatile, pointing to the impact of war in the Middle East. Snap has seen a number of brand-oriented campaigns pause spending, but many have resumed and the impact to its daily run rate has been reduced significantly.
Snap, the parent company of Snapchat, yesterday reported its revenue rose 5% in the latest quarter after two straight quarters of declines on a rebound in the digital advertising market. This was above Wall Street estimates of $1.11 billion, and was driven by improvements to the company's ad platform, investments in machine learning models, and the introduction of the Event Quality Score system. Daily active users also increased 12% year-over-year to 406 million, and the company has reached 5 million users for its paid subscription services.
However, CFO Derek Andersen cautioned the ad market remains volatile, pointing to the impact of war in the Middle East. Snap has seen a number of brand-oriented campaigns pause spending, but many have resumed and the impact to its daily run rate has been reduced significantly.
Overall, the company is continuing to make investments to improve ad ranking and optimization, as well as partnerships with Microsoft to include ads in the form of sponsored links in its AI chatbot My AI. CEO Evan Spiegel said that while My AI is just getting started, it will eventually be a revenue driver.
Originally reported by Martech: https://martech.org/snap-revenue-up-5-on-stronger-digital-ad-market/
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