Snap warns Q3 advertising could be hurt by pandemic impact on sports, movies, back-to-school

Snap warned that the uncertainty around events like the back-to-school season and the operations of sports leagues in the third quarter could impact advertising demand. 

The company said while reporting second quarter earnings Tuesday that so far in Q3, revenue is up 32% from the previous year, but it expects that growth to moderate through the rest of the quarter.

“While we are cautiously optimistic that these trends could sustain over time, we are also conscious that operating conditions may remain volatile, and that economic conditions could further deteriorate,” chief financial officer Derek Andersen said in the company’s earnings call prepared remarks.

“For example, advertising demand in Q3 has historically been bolstered by factors that appear unlikely to materialize in the same way they have in prior years, including the back to school season, film release schedules, and the operations of various sports leagues.”

Andersen said it was difficult to tell how much those factors would impact spend in the rest of the third quarter. 

“Our best estimate at this point is that our full quarter revenue growth rate is likely to be below our quarter to date estimated actual growth rate, and as a result we have built our internal investment plan based on revenue growth of approximately 20 percent,” he said. 

He added the company’s estimates for daily active users in the quarter ahead: “We intend to continue to invest in our business in Q3 and our estimates for our cost structure assume that daily active users will be between 242 million and 244 million in Q3. This implies year-over-year growth of approximately 15 to 16 percent or 32 to 34 million daily active users.”