Snapchat Adds 12 Million Users in Q4, Posts Lower Than Expected Revenue Result
Snapchat added 12 million more active users in Q4 2022, and Snapchat+ subscriptions continue to rise, but company revenue missed market estimates, in another mixed result for the private social app.
First off, on users – as noted, Snap added 12 million more actives, taking it to 375 million DAU.
As you can see, North American user growth is still flat, while European users saw a slight uptick. But it’s the ‘Rest of the World’, specifically India, which is driving Snap growth.
Which is helping to boost the overall usage numbers, and expand opportunity. But on the revenue side, it’s not pushing things forward in a significant way.
As you can see in this chart, Snapchat’s revenue has increased, but a key problem here is that it’s still reliant on the US and Canada for the majority of that spend, with other markets trailing well behind on the revenue front.
In this chart, you can see that Snap’s Revenue Per User has actually declined year-on-year – so while it is growing, it’s not bringing in revenue at equivalent scale, and it’s even going backwards in some respects.
Which is why its stagnant growth in North America is a problem – though Snap has also seen take-up of its Snapchat+ subscription service increase.
“In Q4, our subscription service Snapchat+ reached over 2.0 million paying subscribers. Snapchat+ offers exclusive, experimental, and pre-release features, and in Q4 we launched new features such as Custom Story Expiration and Custom Notification Sounds, providing subscribers with over 12 exclusive features.”
That’s a handy additional revenue stream, but as with all social media subscription services (including Twitter Blue), take-up is generally limited, and at 2 million subscribers, that’s still only 0.5% of Snapchat’s active user base that’s been willing to pay extra for these add-on elements.
Snap has also faced challenges in rebuilding its ad business, in the wake of Apple’s iOS 14 update, which has impacted data collection, and Snap CEO Evan Spiegel says they still have some way to go on this yet:
“We continue to face significant headwinds as we look to accelerate revenue growth, and we are making progress driving improved return on investment for advertisers and innovating to deepen the engagement of our community.”
Snap has seen improvement in its commerce integrations, which includes digital items for Bitmoji avatars which Snap is eventually looking to translate into real-world item sales as well. Snap also says that it’s facilitated over than 161 million product trials by over 35 million Snapchatters for Walmart, leveraging its Catalog-Powered Shopping Lenses at-scale.
Those point to bigger opportunities, but right now, amid the broader economic downturn, and restrictions on data collection and targeting, Snapchat is in a tough spot, and will be for some time yet.
Essentially, then, you’re banking on Snap’s future, and its advanced tools that could help it better align with expanded AR and VR use. And Snap is seemingly in a good position on this front – though again, the impacts of the last year, which also forced Snap into lay-offs, will also have some effect.
Really, then, the results here are relative to your perspective.
For advertisers, more Snap users means more potential reach – but most of Snap’s growth is coming from outside the US. More advanced AR activations could become a bigger deal in future, but it depends on how you’re looking to connect, and product fit.
Investors won’t be overly happy with the numbers, but there are positive signs on the horizon. It’s just that the horizon, in this respect, remains well in the distance at this stage.