Wednesday, November 30, 2022

Snapchat Posts Strong Results in Q2, Including a Record Increase in Revenue

Snapchat has published its latest earnings resultsAs the platform continues to improve its offerings and establish a niche for itself in the market, it has seen a steady increase in active users as well as a significant jump of revenue.

First, Snapchat users – Snapchat added 13 million moreDaily actives increased to 293 millions in Q2, a 23% increase over the previous year.

Snapchat Q2 2021

After a period shaky usage resultsAfter the launch of Instagram Stories (which replicated one of the core functions of the app), Snapchat has been re-aligning its focus to help friends maintain a more direct connection. This has allowed the app to regain its growth momentum and boost its overall usage.

Snapchat is seeing its largest growth in India (see the ‘Rest of World’ chart above), where the app has seen a significant increase in popularity, especially after the release of the Android version. TikTok banIn the region.

Snap is attempting to capitalize on this with Indian-specific content. Snap added 24 Indian Discover Channels in the quarter. It’s also gaining market traction with its TikTok replica ‘Spotlight‘, which once again has seen continued growth in usage.

Snapchat Spotlight growth

Spotlight’s growth is attributed to Snapchat’s creator payments for top content. They started at $1million per day but have since been reduced to Instead, you can choose to spend’millions per day’. Some Spotlight creators have reported frustrationsSpotlight payments are a great way to increase Snap usage. However, the added incentive of being paid for content has made Spotlight a more attractive option.

However, this funding won’t last forever. The added costs will increase Snapchat’s “Cost of Revenue” significantly in the first half of 2018.

Snapchat Q2 2021

Snap hopes to eventually end its Spotlight payouts and introduce a new fan donation process via Snap Tokens. This could make Spotlight more self-sustaining.

Will creators stay put if they aren’t able to make millions of dollars for their creations? Snap will soon find out. 

Snap saw a significant 116% YoY growth to $982 million in revenue during the period.

Snapchat Q2 2021

As you can see, this is a significant jump over Q1 and even the busier quarter of Q4. Snap shares rose 13.9%The unexpectedly large increase has buoyed the market.

Snapchat’s average revenue by user (ARPU), which revealed that the company is gaining ground in all markets, was particularly noteworthy.

Snapchat ARPU stats

The chasing trend is the greatest positive. Snap’s US ARPU may be higher than Snap’s, but Snap’s businesses offerings in the US are far stronger. Snap’s European numbers are rising, which is a positive sign for its future prospects. Its ‘Rest of the World” figures are also likely to catch up, based upon that trend.  

Snap has highlighted the expanded opportunities of Snap in a separate article investor presentationThis graphic illustrates the potential for expansion of this trend based on these trends. 

Snapchat growth potential

Snapchat is poised to expand its reach in these areas over time. The platform is now looking to expand its operations in many other areas to the next level. It has the potential for tremendous growth as it expands its base and its local impact.

Snapchat penetration

That’s a key point for marketers. Snap’s reach is enormous among younger audiences, and it seems to be picking up with this segment in increasing numbers.

Snap also reported that Snap’s Games element is seeing greater usage. Snap reports that there are 30 million users who play games in the app each month. 

Snapchat games usage

Snap is also looking to expand its Discover programming in line with user demand. Snap is truly leading the way in next-generation video programming that is in line with evolving consumer habits.

Snapchat Q2 2021

Discover content is shorter and more episodic, which seems to appeal to younger viewers, who have grown up watching YouTube clips. Snap could be the next generation in TV content, at least when it comes to snackable, quick-hit shows that can easily be consumed anywhere and anytime.

Snap also noted that users are liking Snap’s new camera scan options.

“We introduced several new categories in Scan, including food and fashion. This is already used by over 170 million Snapchatters per month to identify dog breeds and plant species, discover recipes, and shop clothing.”

This is where Snap is really looking. Snapchat’s next phase is likely to be more into. AR and digital clothingThe app offers sponsored digital items as well as new AR sizing options to convert those items into real world purchases.

Snap is surprisingly well-equipped for AR, given its superior resources. In fact, in many ways, its actually leading the charge, with its connection to younger users, and alignment with rising trends, potentially seeing it better placed to facilitate AR adoption than other, bigger providers.

As the next-generation Spectacles become available, this will become an even more important consideration.

AR is Snap’s next step. While Snap is seeing positive and improving responses to its existing tools and its evolving Discover program, it could harness that same enthusiasm and turn it into the next stage of AR. That could open up a wide range of opportunities for the app.

These results seem to indicate that it is on the right track.