Snap is on a mission to diversify its revenue streams, moving from a business model that primarily follows advertising revenue to one that also makes money through subscriptions and eventually hardware. The company’s latest quarterly earnings report shows that the company has had some success with its strategy so far.
Snap’s revenue for the fourth quarter was $1.7 billion, up 10% from the same period last year. Average revenue per user also increased slightly (from $3.44 to $3.62). The company’s net income was $45 million, up from $9 million a year earlier, according to its financial report.
The company also continues to generate significant revenue from its paid subscription service, Snap+, which the platform launched in 2022. The number of subscribers to the service increased by 71% year-on-year to 24 million.
While these numbers may seem to suggest that the company’s trajectory is heading in the right direction, the earnings report also shows that the number of daily active users on the platform declined slightly last quarter, from 477 million to 474 million. According to the report, these users decreased in North America and Europe, but increased slightly in the rest of the world.
Reuters also reported that the company expects revenue for the first quarter of this year to be lower than analysts had expected, as competition from Facebook, Instagram and TikTok reduces advertising revenue.
During Wednesday’s earnings call, CEO Evan Spiegel focused on the company’s new products, including its recent efforts to charge users for Memories storage, a feature that lets users save and store snaps, and its plans to launch Specs later this year. The company hasn’t released a consumer version of its augmented reality glasses since 2019. In anticipation of that event, Snap recently announced the creation of a new subsidiary, Specs Inc., dedicated solely to the further development of its glasses.
“Our long-term vision for augmented reality extends beyond smartphones to a future where computing is more naturally, contextually and seamlessly integrated into the real world,” said Spiegel. The CEO added that it was important for Specs to develop a “strong independent brand” and said the hardware products could appeal to “a different audience segment” than “Snapchat’s core audience.”
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That being said, it seems like the strategy behind the specs hasn’t been fully resolved yet. Later in the conversation, Spiegel continued: “We’re very close to launch, so the key here is, you know, making sure we have a successful launch and making sure we have a great product. And, you know, I think we have a lot of flexibility to think about how we can make it profitable.” [on] It moves forward. ”
