Twitter and Snap saw record revenue growth in Q2

Twitter and Snap both reported record revenue growth for the quarter ending in June 2021, driven in part by healthy user growth and good engagement rates for recently introduced product features. At the same time, the two social giants saw a lower than expected impact on ad revenue as a result of Apple’s App Tracking Transparency that arrived on iOS 14.5, but the effects may become more noticeable in the coming quarters.

Twitter’s latest financial report is in, and it looks like the company was able to beat analyst expectations on revenue for Q2 2021, sending company shares up over 5 percent. For the three months ending in June, the company recorded $1.19 billion in revenue, which is a 74 percent increase compared to the same period of last year.

Twitter says it’s reached 206 million monthly active users, an 11 percent year-over-year increase that came as the result of product improvements and more people using Twitter to stay on top of the news concerning recent and current events. But more importantly, Twitter was able to go from recording a $274 million loss in Q2 2020 to making a $30 million profit this year.

Snap’s numbers also paint a bright picture, and the company has seen the highest user growth in years. Revenue more than doubled to $982 million, which is the fastest rate recorded among social media giants this year.

Daily active users increased to 293 million, a healthy 23 percent year-over-year growth and the highest recorded in the last five years for the company. Snapchat’s TikTok-like “Spotlight” feature saw a 49 percent increase in engagement compared to the previous quarter. Snap attributes this growth to the recent easing of restrictions, as CEO Evan Spiegel says Snapchat is designed to be used by people when going out.

Snap still recorded a loss for the second quarter, but at $152 million, it’s less than half of what was recorded in Q2 2020. Average revenue per user is now $3.35, higher than analyst expectations but still lower than where it could be, as most of the user growth happened outside of Snap’s core American and European markets, where advertisers typically pay more to reach users.

Both Twitter and Snap noted that Apple’s infamous App Tracking Transparency feature introduced in iOS 14.5 had a lower than expected impact on ad revenue.

Tracking helps target users with more relevant ads, and companies that depend on this system feared that asking people to opt in might be persuaded to decide against doing so, especially if they were told about the impact on their privacy. Case in point, earlier this month, app analytics firm Flurry said that 96 percent of iOS users in the US had opted out of in-app tracking, which caused many advertisers to shift their spending to prioritize advertising on Android.

Snap says it saw “higher opt-in rates than we are seeing reported generally across the industry, which we believe is due in part to the trust our community has in our products and our business.” However, it’s possible Twitter and Snap will see a bigger impact in the coming quarters.