Snap Adds Users but Experiences Its Slowest Revenue Growth

Snap Inc. reported its slowest-ever quarterly growth, with revenue up 6 percent to $1.13 billion year-over-year in Q3. Due in part to a 25 percent spending increase, Snapchat’s parent logged a net loss of $359 million, far exceeding the $72 million loss a year prior. Interestingly, Snap increased daily active users by 19 percent, to 363 million (surpassing analyst predictions of 358 million). Snap, like virtually every social media platform, has struggled to maintain revenue growth since Apple’s 2021 privacy changes made it harder to target ads.

On Thursday, Snap CFO Derek Andersen said on an earnings call that “the company continued ‘to believe we have significant room to grow our advertising business.’ But he added, ‘As you’ve seen the macro challenges compound on some of the platform changes we saw last year, certainly we’ve been demand-challenged,’” The New York Times reports.

“In a letter to investors, the company said revenue in the current quarter had increased 9 percent from a year ago, though it believed ‘it is highly likely that year-over-year revenue growth will decelerate’ over the rest of the fourth quarter,” NYT said, noting that “Snap said its internal forecasts for the fourth quarter were based on ‘approximately flat’ growth,” an observation that sent Snap’s stock price tumbling “more than 26 percent in after-hours trading.”

Unlike those looking to the metaverse for growth, Snap trained its sights on augmented reality. In 2016, the company began selling augmented reality glasses, called Spectacles, while also developing AR software for businesses. But NYT notes that “the most recent version of Spectacles was given only to some content creators and is not for sale,” and “may not enter the mainstream for another decade.”

Snap also faces increased competition for attention of young audiences that are its principal users, fending off advances not only from TikTok but also the photo-sharing app BeReal. This year marks the first time in six years that Snapchat was not No. 1 in the annual Taking Stock with Teens survey by investment bank Piper Sandler, which found 38 percent of Gen Z users chose TikTok as their favorite social media platform, while 30 percent chose Snapchat.

Doing its best to stay competitive, Snap announced some new features for users of Snapchat+, its $3.99 per month premium offering. Snapchat+ subscribers now get the ability to set story expirations, from one hour up to a week, as well as custom notification sounds and colored camera borders, writes The Verge.

“In Thursday’s release, Snap said that its Snapchat+ subscription service ‘reached over 1.5 million paying subscribers in Q3 and is now offered in over 170 countries,” notes CNBC.

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