Snapchat's new AR lens helps company shares rise by 11 percent to 203 million

Snapchat's new filters went viral when it introduced a lens that let users switch their gender in photos.

Snap Inc's Snapchat on Tuesday beat analysts' estimates for user growth and revenue, getting a boost from a better version of its Android app and the launch of a new augmented reality photo lenses.

The company said the number of daily active users rose to 203 million in the second quarter ended 30 June from 190 million in the prior quarter. The user metric was also up from 188 million a year earlier.

Shares of Snap jumped 11.6 percent to $16.55 in after-hours trading.

The AR lenses, which are filters that can overlay everything from bunny ears to freckles onto a user's photo, went viral when it introduced a lens that let users switch their gender in photos.

The latest daily active user figure, widely watched by investors and advertisers, beat analysts' average estimate of 192.2 million, according to IBES data from Refinitiv.

After struggling last year with declines in users and high executive turnover, Snap finally returned to growth in the first quarter. In recent months, it scored wins with its augmented reality lenses, and the launch of mobile games within Snapchat in partnership with game developers such as Zynga Inc.

"The popularity of these lenses drew millions of people into our rebuilt Android application, where they experienced the new and improved Snapchat that led to increased engagement," Chief Executive Officer Evan Spiegel said in prepared remarks.

(Also read: TikTok user-spend reaches $10.8 million in June 2019 with a 588 percent growth from last year)

Image: Pixabay.

Image: Pixabay.

Snap's revenue, which it earns from selling advertising on the app, jumped about 48 percent to $388 million and beat Wall Street's average estimate of $359.7 million, according to IBES data from Refinitiv.

Snapchat has been largely untouched by privacy issues plaguing Facebook Inc and Google's YouTube, two of Snap's rivals for digital ad dollars, because of its disappearing messages that make it difficult to broadcast misinformation or unsavory content.

Snap expects daily active users to be between 205 million and 207 million in the third quarter, Chief Financial Officer Derek Andersen said.

Of the 13 million daily active users Snap gained during the second quarter, 7 million to 9 million were from the new augmented reality lenses, Andersen said.

"Now the challenge is to convince those newly added users to stick around and continue to use Snapchat," said Debra Aho Williamson, an analyst with research firm eMarketer.

Average revenue per user jumped more than 36 percent to $1.91 in the quarter.

Net loss narrowed to $255.2 million, or 19 cents per share, from $353.3 million, or 27 cents per share, a year earlier. Excluding items, the company lost six cents per share. Analysts were expecting a loss of 10 cents per share. Snap expects third quarter revenue in the range of $410 million to $435 million. Analysts on average were expecting revenue of $402.1 million, according to IBES data from Refinitiv.


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