Snapchat performance is finally looking more positive thanks to user growth

Anne Freier

In Mobile Advertising

February 8, 2018

It seems the hard work is finally paying off for Snapchat. After reporting weak earnings last year, the messaging app set out to redesign the app late last year.
Initial reactions weren’t all that positive with users generally confused by some of the changes which were meant to declutter the app.
However, according to Snap Inc.’s Q4 2017 earnings report, the move seems to be working.
Snapchat added 8.9 million users during the last quarter of 2017. Total daily active users are now at 187 million. Although that’s still far off from rivals Facebook and Instagram, which have 1.4 billion and 500 million daily active users respectively, it’s quite a boost for the app.
Upon closer inspection, the increase in users is led by regions outside of North America and Europe where Snapchat added three million new users.

Back in 2017, the company renewed its focus on improving Android performance and began to partner with wireless carriers globally to bring down the cost of data usage when using the app.
In return, average revenue per user in developing regions shot up from $0.3 to $0.56. Rest of the World revenue jumped a whopping 333% during Q4 2017.
Snap Inc reported its highest revenue to date of $285.7 million in Q4 2017 – representing a 72% increase compared to the previous year.
CEO Evan Spiegel commented that the growth was likely driven by additional sports content. Snap Inc now plans to deepen the relationships with sports organization such as the NBA and NFL in 2018.
Video seems to be a mixed bag for networks on Snapchat. Whilst CNN’s Snapchat show did not catch on, ESPN just launched a SportsCenter version exclusively for the app. However, Snapchat’s redesign seems to be performing well in terms of placing these shows in front of users on app launch.
Higher revenues were also helped by Snap Inc’s programmatic advertising platform and its self-serve Ads Manager. 90% of ads are now bought this way, compared to just 10% in 2016.

“Our self-service tools have also enabled us to quickly scale in international markets. For example, in the Middle East, we made the strategic decision to rely exclusively on our self-serve tools for Snap Ads […] and out of all our international offices, this region was our top contributor to overall revenue growth in Q4,” said COO Imran Khan.

It remains to be seen if Snap Inc’s new strategy will pay off in the long run, but it’s a positive start for the company.