Snap Surges as Earnings Beat Expectations, Users Continue to Climb

Tami Abdollah

Tami Abdollah was dot.LA's senior technology reporter. She was previously a national security and cybersecurity reporter for The Associated Press in Washington, D.C. She's been a reporter for the AP in Los Angeles, the Los Angeles Times and for L.A.'s NPR affiliate KPCC. Abdollah spent nearly a year in Iraq as a U.S. government contractor. A native Angeleno, she's traveled the world on $5 a day, taught trad climbing safety classes and is an avid mountaineer. Follow her on Twitter.

Snap Surges as Earnings Beat Expectations, Users Continue to Climb
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Snap Inc. beat analyst expectations Tuesday when it reported earnings for the first quarter of 2020, seeing its stock surge 17% in after-hours trading.

The social media and self-described camera company saw its revenue increase 44% year-over-year to $462 million amid the economic recession caused by the novel coronavirus pandemic. The Santa Monica-based company also saw daily active user growth increase by 20% year-over-year, or by 39 million, with 229 million users.


"We are seeing sustained communication volumes on our service that eclipse the peaks we see during major holidays," said CEO and cofounder Evan Spiegel during Tuesday's earnings call. "For example, communication with friends increased by over 30 percent in the last week of March compared to the last week of January, with more than a 50 percent increase in some of our larger markets. Snapchat has always been focused on helping people build and maintain their friendships, which is especially critical as people practice physical distancing and shelter in their homes."

Snap's last reported earnings and forward-looking estimates were in February before most countries outside of China had been hit by COVID-19. The move into economic recession has been especially challenging for Snap's advertising partners, which has impacted the company's growth rate, the company said. While year-over-year growth was roughly 58% in January and February, it declined to about 25% in March. In North America, revenue grew 40% year-over-year in Q1, a small drop from 42% in the prior quarter.

Yuval Ben-Itzhak, CEO of Socialbakers, a social media marketing platform, said Snap's strong Q1 earnings are a pleasant surprise but warned that because COVID-19 hit late in Q1, "Snap is likely not to have seen such a great impact on its ad revenue. It will be Q2 when they feel the true impact on their business."

Ben-Itzhak noted that because Snap is not the primary method for brands with big ad budgets and is more experimental, the platform is more vulnerable to budget cuts than other social media platforms.

Because of the rapidly changing environment caused by the pandemic, the company's Chief Financial Officer Derek Andersen said it wouldn't share financial guidance for Q2 such as revenue or adjusted EBITDA guidance.

As people have turned to videoconferencing and live streaming, the company said it's seen 30 times the increase in daily downloads of their Snap Camera, a desktop app that allows people to add Lenses -- Snap's augmented reality additions -- to video services they are using.

Snap has launched new products and features specifically in response to COVID-19, including what it says is its first-ever fundraising AR Lens to drive donations from 33 countries to the World Health Organization's COVID-19 Solidarity Response Fund. The effort uses its Scan camera search technology to recognize 23 currency notes and to trigger different lenses per currency to visually show money being "raised" and transformed into the three pillars of the fund, namely, the image of a hospital for patient care; a mask for medical supplies; and beakers that represent research and development.

Snap also added a new feature called "Here For You" that provides proactive in-app support to users who may be experiencing a mental health or emotional crisis, or want to learn more to help friends, Spiegel said. The company has also published more than 700 Discover editions with coverage on COVID-19 developments from content partners, in-house news teams and agencies like the Centers for Disease Control and Prevention and the WHO.

Snap benefited from users engaging more with its "Discover" content, which includes various Hollywood content partners and brand marketers -- as overall ad revenue has dropped elsewhere. Users watching Discover content increased more than 35% year over year. It has also added new original content like the docuseries Nikita Unfiltered.

Spiegel said the company has seen a "sharp increase" in group-related activities like chat and games. The company launched five new games in Q1, and saw average daily time spent playing games more than double in March -- as the pandemic forced people to stay in their homes.

The company still has a negative free cash flow of $5 million, though it improved by $73 million.

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Do you have a story that needs to be told? My DMs are open on Twitter @latams. You can also email me, or ask for my Signal.

tami@dot.la

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How the 'Thrift Haul' Boosted Secondhand Ecommerce Platforms

Lon Harris
Lon Harris is a contributor to dot.LA. His work has also appeared on ScreenJunkies, RottenTomatoes and Inside Streaming.
How the 'Thrift Haul' Boosted Secondhand Ecommerce Platforms
Evan Xie

If you can believe it, it’s been more than a decade since rapper Macklemore extolled the virtues of thrift shopping in a viral music video. But while scouring the ranks of vintage clothing stores looking for the ultimate come-up may have waned in popularity since 2012, the online version of this activity is apparently thriving.

According to a new trend story from CNBC, interest in “reselling” platforms like Etsy-owned Depop and Poshmark has exploded in the years since the start of the COVID-19 pandemic and lockdown. In an article that spends a frankly surprising amount of time focused on sellers receiving death threats before concluding that they’re “not the norm,” the network cites the usual belt-tightening ecommerce suspects – housebound individuals doing more of their shopping online coupled with inflation woes and recession fears – as the causes behind the uptick.

As for data, there’s a survey from Depop themselves, finding that 53% of respondents in the UK are more inclined to shop secondhand as living costs continue to rise. Additional research from Advance Market Analytics confirms the trend, citing not just increased demand for cheap clothes but the pressing need for a sustainable alternative to recycling clothing materials at its core.

The major popularity of “thrift haul” videos across social media platforms like YouTube and TikTok has also boosted the visibility of vintage clothes shopping and hunting for buried treasures. Teenage TikToker Jacklyn Wells scores millions of views on her thrift haul videos, only to get routinely mass-accused of greed for ratching up the Depop resell prices for her coolest finds and discoveries. Nonetheless, viral clips like Wells’ have helped to embed secondhand shopping apps more generally within online fashion culture. Fashion and beauty magazine Hunger now features a regular list of the hottest items on the re-sale market, with a focus on how to use them to recreate hot runway looks.

As with a lot of consumer and technology trends, the sudden surge of interest in second-hand clothing retailers was only partly organic. According to The Drum, ecommerce apps Vinted, eBay, and Depop have collectively spent around $120 million on advertising throughout the last few years, promoting the recent vintage shopping boom and helping to normalize second-hand shopping. This includes conventional advertising, of course, but also deals with online influencers to post content like “thrift haul” videos, along with shoutouts for where to track down the best finds.

Reselling platforms have naturally responded to the increase in visibility with new features (as well as a predictable hike in transaction fees). Poshmark recently introduced livestreamed “Posh Shows” during which sellers can host auctions or provide deeper insight into their inventory. Depop, meanwhile, has introduced a “Make Offer” option to fully integrate the bartering and negotiation process into the app, rather than forcing buyers and sellers to text or Direct Message one another elsewhere. (The platform formerly had a comments section on product pages, but shut this option down after finding that it led to arguments, and wasn’t particularly helpful in making purchase decisions.)

Now that it’s clear there’s money to be made in online thrift stores, larger and more established brands and retailers are also pushing their way into the space. H&M and Target have both partnered with online thrift store ThredUp on featured collections of previously-worn clothing. A new “curated” resale collection from Tommy Hilfiger – featuring minorly damaged items that were returned to its retail stores – was developed and promoted through a partnership with Depop, which has also teamed with Kellogg’s on a line of Pop-Tarts-inspired wear. J.Crew is even bringing back its classic ‘80s Rollneck Sweater in a nod to the renewed interest in all things vintage.

Still, with any surge of popularity and visibility, there must also come an accompanying backlash. In a sharp editorial this week for Arizona University’s Daily Wildcat, thrift shopping enthusiast Luke Lawson makes the case that sites like Depop are “gentrifying fashion,” stripping communities of local thrift stores that provide a valuable public service, particularly for members of low-income communities. As well, UK tabloids are routinely filled with secondhand shopping horror stories these days, another evidence point as to their increased visibility among British consumers specifically, not to mention the general dangers of buying personal items from strangers you met over the internet.

How to Startup: Mission Acquisition

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

How to Startup: Mission Acquisition

Numbers don’t lie, but often they don’t tell the whole story. If you look at the facts and figures alone, launching a startup seems like a daunting enterprise. It seems like a miracle anyone makes it out the other side.

  • 90% of startups around the world fail.
  • On average, it takes startups 2-3 years to turn a profit. (Venture funded startups take far longer.)
  • Post-seed round, fewer than 10% of startups go on to successfully raise a Series A investment.
  • Less than 1% of startups go public.
  • A startup only has a .00006% chance of becoming a unicorn.

Ouch.

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From The Vault: VC Legend Bill Gurley On Startups, Venture Capital and Scaling

Spencer Rascoff

Spencer Rascoff serves as executive chairman of dot.LA. He is an entrepreneur and company leader who co-founded Zillow, Hotwire, dot.LA, Pacaso and Supernova, and who served as Zillow's CEO for a decade. During Spencer's time as CEO, Zillow won dozens of "best places to work" awards as it grew to over 4,500 employees, $3 billion in revenue, and $10 billion in market capitalization. Prior to Zillow, Spencer co-founded and was VP Corporate Development of Hotwire, which was sold to Expedia for $685 million in 2003. Through his startup studio and venture capital firm, 75 & Sunny, Spencer is an active angel investor in over 100 companies and is incubating several more.

Bill Gurley in a blue suit
Bill Gurley

This interview was originally published on December of 2020, and was recorded at the inaugural dot.LA Summit held October 27th & 28th.

One of my longtime favorite episodes of Office Hours was a few years ago when famed venture capitalist Bill Gurley and I talked about marketplace-based companies, how work-from-home will continue to accelerate business opportunities and his thoughts on big tech and antitrust.

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