HomeSocial Media MarketingSnapchat Adds More Users, Posts Lower Than Expected Revenue in Q4

Snapchat Adds More Users, Posts Lower Than Expected Revenue in Q4

It’s one other combined bag for Snap Inc. in its newest efficiency replace, with the platform including extra customers, although not in its most profitable markets, whereas income additionally elevated, although not on the ranges anticipated.

Thus is the theme of Snap’s efficiency, a yin-yang of strengths which can be additionally weaknesses, in just about each aspect.

First off, on utilization. Snapchat rose to 414 million every day lively customers in This fall, a ten% YoY enhance.

Which is a constructive, although as you may see, Snap really misplaced 1,000,000 customers in North America, which is a big word over the vacation interval.

Virtually all the platform’s progress as soon as once more got here within the “Remainder of the World” section, which has been the identical story over the previous yr.  Snapchat’s seen rising curiosity in India, which had been a spotlight of its growth push, nevertheless it now says that it’s going to vary its method to hone in on “extra mature” markets.

As per Snap:

“Whereas we see important long-term potential for group progress in Remainder of World, we’re shifting extra of our focus towards group progress in our extra mature geographies like North America and Europe. Over the previous a number of years, we’ve pushed important progress in DAU by specializing in Android efficiency in massive rising markets, together with India. We’ll proceed to construct on our momentum within the APAC area whereas rising our funding in bettering the product expertise for our group in North America and Europe.”

Certainly, final week, Snap launched a brand new advert marketing campaign in North America, wherein it pitches itself as “the antidote to social media”.

Whether or not that can get extra individuals utilizing the app stays to be seen.

By way of person engagement, Snap says that whole time spent watching its TikTok-like Highlight feed elevated greater than 175% year-over-year, whereas Highlight common month-to-month lively customers elevated greater than 35% year-over-year.

Which is not any shock given the broader reputation of short-form video, although it is usually value noting that Snap has discontinued funding for its Snap Originals programming, probably on account of extra curiosity in cheaper, user-generated content material.

As an alternative of Originals, Snap’s as a substitute trying to work with widespread creators on new initiatives, and it did see progress on that entrance, with public Tales posted by Snap Stars rising 125% year-over-year within the U.S. Snap’s additionally trying to assist creators parlay their platform reputation into model offers, as a way to determine a extra sustainable course of for creator income share.  

AR additionally stays a key space of alternative for the platform, with over 350,000 creators and builders now having constructed virtually 3.5 million AR Lenses for the app. On common, 300 million Snapchatters interact with AR day by day, and if Snap can convert that into expanded enterprise choices, that might nonetheless play a key function in its future.

Although it’s additionally taken a step again on that entrance, with Snap shutting down its third-party AR growth platform ARES late final yr as a part of its cost-cutting measures. Which is the problem of its broader enterprise struggles, in that it wants income to gas growth, nevertheless it wants to cut back prices to rationalize the enterprise.

Which brings us to its newest income outcomes:

Snap Q4 2023

As you may see, Snap introduced in $1.36b in income for the quarter, a rise of 5% year-over-year. Which is comparatively good given the broader market situations, however inferior to the market was anticipating.

An enormous downside for Snap, as famous, is that whereas it’s rising, it’s struggled to develop its viewers in its key income markets, with utilization in North America and EU remaining comparatively flat. Which is an enormous concern while you take a look at these charts:

Snap Q4 2023

Snap’s common income per person shouldn’t be solely method decrease within the “Remainder of the World” class, the place just about all of its progress is coming from, nevertheless it’s additionally declined during the last yr. So once more, whereas it’s increasing its viewers, which ought to current future alternatives, its present market potential isn’t rising, which displays poor capitalization on that progress.

That might counsel flaws in Snap’s evolving marketing strategy. And as reported by CNBC, immediately’s report additionally marks six consecutive quarters of single-digit progress or decline on the app.

Snap does have potential, and at 414 million lively customers, and rising, there needs to be extra worth there. However one other problem for the app is that it’s nonetheless not ageing up with its viewers, and never resonating past its core demographic.

Pew Research social media use

As you may see on this chart, no one over 30 is lively on Snap, with the app seeing the second lowest mixed general utilization amongst older audiences of the main social apps (solely simply beating out Reddit). Snap has been making an attempt to enhance on this, however up to now, it stays a distinct segment viewers platform. Which can also be its key power in lots of respects, and one thing that it has utilized in its advert associate pitch up to now. However it does additionally restrict its enterprise potential, as fewer manufacturers wish to attain this market.

And with its AR ambitions seemingly additionally taking successful on account of lay-offs and different cost-cutting measures, it does seem to be Snap’s alternatives are restricted, and can stay that method for a while.

At one stage, it seemed like Snap can be the chief of the AR race, with its Spectacles glasses set for an AR improve in future. However now, Apple and Meta are shifting into gear with their AR choices, and with far bigger useful resource swimming pools for respective growth, it’s arduous to see Snap getting again into this race.

Perhaps it might probably. Spiegel has additionally mentioned that its AR ambitions stay a key focus, regardless of its price chopping, although Spiegel has additionally criticized the broader metaverse push from Meta, which it sees as the subsequent stage of digital connectivity.

So once more, there are various contradictions inside Snap, and for each constructive, there’s additionally a word of potential damaging as effectively, sustaining its less-than-ideal market steadiness.

Is it nonetheless a very good future wager? For customers, Snap stays a key connector, and a crucial instrument for teen connection particularly. However for buyers, it could be much less precious, not less than until it might probably get its income again on a stable monitor.


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