Snapchat Revenue and Usage Statistics (2019)

Mansoor Iqbal

Updated: September 13, 2019

Snapchat is an image and video messaging app, developed by Stanford University students Evan Spiegel, Bobby Murphy, and Reggie Brown in 2011. It allows users to capture and send ‘Snaps’ that are only viewable for a set duration of 1 to 10 seconds or until closed by recipient, after which they are automatically deleted. Originally, this was just photos; video capability was added in 2012.

Evan Spiegel has stated in interviews that the smartphone camera was at the very heart of the Snapchat concept – indeed, it describes itself as a ‘camera company‘. There were many other apps that were centred on pictures,  the most prominent being Instagram, but only Snapchat let users communicate solely through pictures. This novel concept allowed gave the app its USP.

A number of additional features have been added to complement this. In 2013, Snapchat introduced ‘Stories’, allowing users to package a series of chronological snaps – a feature since replicated by Instagram. While these are time limited, lasting for 24 hours, Snapchat users now have the option to save specific Snaps onto a private storage area with the ‘Memories’ feature.

Users can use the map feature to share the location of their snaps with other users, while the ‘Crowd Surf’ feature allows Snapchatters to see video footage from different vantage points when a high concentration of users is filming in the same place at the same time.

In 2018  Snapchat moved away from user-generated content for the first time. Snapchat Originals features original video content shot for Snapchat specifically. Names like NBCUniversal (with which Snapchat co-owns a studio), A&E Networks, the BBC, ABC, Metro-Goldwyn-Mayer have been mentioned in connection with Snapchat Originals.

A new spate of these were announced in April 2019, with Buzzfeed perhaps the most eye-catching contributor. April 2019 also saw the announcement of Snap Games – a new social gaming platform within the app.

Snapchat has been a real pioneer in bringing augmented reality to the mainstream through its filters; AR features were opened up to external developers for the first time in 2018. In 2016 Snap Inc., Snapchat’s parent company, began to sell Spectacles, glasses with a built-in camera capable of recording 10 seconds of video and posting it online via paired smartphones. Spectacles 3 were announced in August 2019 – with two cameras in order to capture footage in 3D. Snap Inc. also owns Bitmoji, and Zenly.

A controversial redesign of the app in 2018 was publicly criticised by Kylie Jenner. Jenner’s tweet instantly knocked $1 billion off the value of the company. Later in the year saw the first drop in user numbers posted by Snapchat since launch. CEO Evan Spiegel received a petition signed by 1.2 million users calling for the redesign to be reversed.

After a tough 2018, however, Snapchat’s fortunes have turned around. A renewed focus on its core Gen Z userbase (note that Buzzfeed collaboration), improved functionality, and advances in augmented reality are credited for the recovery, followed by the growth of user numbers. An improved Android app is also thought to have helped matters.

On March 2, 2017 Snap Inc. went public, 6 years after its creation in 2011, with shares priced at $24. A low point in December 2018, at which point Snap shares could be purchased for under $5, seems long in the memory (at the time of writing at least) with stock climbing back to IPO levels.

Continue reading to see our compilation of Snapchat user and usage statistics, as well as Snapchat revenue statistics and comparison stats between Snapchat and key rival Instagram.

Table of Contents

Snapchat User Statistics

Snapchat Usage Statistics

Snap Inc. Revenue Statistics

Snapchat vs. Instagram Statistics

Snapchat Key Data Points

  • Snapchat daily users worldwide numbered 203 million in Q1 2019
  • Snapchat North American DAUs accounted for 83 million, with European DAUs coming to 64 million
  • US penetration rate among 18-24 year olds 94% (social media users) according to eMarketer, or 73% (US adults) according to Pew Research Center
  • US penetration rate among 12-17 years olds at 92% according to eMarketer
  • 27% of US adults use Snapchat in all (Pew Research Center)
  • 61% of Snapchat users globally are female
  • 3.5 billion snaps are sent per day, as of Q2 2019
  • Estimates for average daily time spent of the app vary, from 27 minutes to 50 minutes; no official stats have been made available
  • Snapchat users send an average of 34 snaps per day
  • Snapchat daily video views average 10 billion
  • As of April 2019, 15 billion plays with Snapchat Lenses have been logged
  • A total of 500,000 Lenses have been created
  • Snapchat Originals’ Endless Summer was counted 28 million viewers over its first series
  • Snap Inc. revenue Q2 2019 came to $388 million
  • Total revenue 2018 Snapchat revenue came to $1.2 billion
  • Snap Inc. market cap $21.7 billion, as of September 2019
  • Snapchat Discover ad pricing – $50,000+ a day
  • Snap Ads are available for $3,000 month
  • Advertisers can also buy sponsored lenses for $450,000-$700,000 a day – people play with these for an average of 20 seconds

Snapchat User Statistics

How many people use Snapchat? As of Q2 2019, Snapchat reported 203 daily active users – up on 190 million on Q1 2019, and 188 million year-on-year.

This represents a reversal of fortune for Snapchat after a difficult 2018, which saw a decline from 191 million daily active users in Q1 2018 to 188 million in Q2 2018, and a stagnant 186 million in Q3 and Q4 2018. This followed a much-maligned redesign (by influential Kylie Jenner, among others) in Q1 2018.

The 203 million figure also represents the first year-on-year increase in Snapchat DAU since Q3 2018, with even the quarterly improvement of 190 million in Q1 2018 down on 191 million DAU in Q1 2018.

Snapchat user growth was strongest in percentage terms between 2014 and 2017. In Q1 2014 Snapchat users numbered slightly over 40 million, the bulk of whom were in North America. By Q1 2015 the company doubled its user base to 80 million and by Q1 of this 2017 it managed more than double this number again (166 million). Growth has been more steady since then.

Snapchat daily active users worldwide, Q1 2014- Q2 2019

Snapchat users by region

Source: Statista

Snapchat demographics 

At present North American Snapchat users account for 83 million of the app’s user base, with Europe next at 64 million. At 56 million, however, the rest of the world is narrowing the gap.

The 56 million figure in Snapchat DAU in the rest of the world represents a considerable jump from the previous quarter’s figure of 49 million. This is a medium-term trend. In proportional terms, we’ve seen the greatest increase in Snapchat users in the rest of world since Q1 2014 – a ninefold increase over the 6 million reported at this point.

While North American users are still the core demographic of the Snapchat daily user base, they have come to gradually occupy a smaller percentage of the total Snapchat users as European and rest of the world users account for an increasing share. In Q1 2014, North American Snapchat users accounted for 57%, Europeans for 30%, and the rest of the world for 13% of the total user base.

By Q2 2019, North American Snapchat users accounted for 41%, European users for 32%, and the rest of the world for 28%. With Snapchat seeming to have taken hold in the  diverse markets of the rest of the world, would it be a huge surprise to see something approaching parity between the three in the future?

The US remains by far the biggest Snapchat market, however, with 98 million users to second-placed France’s 20 million (July 2019 stats). These figures, pertaining simply to ‘users’, have been drawn from external sources, so do not match up with Snap’s official DAU numbers, it should be noted.

The rankings are a bit closer after that point, with some interesting results included; namely Saudi Arabia in fifth place, Mexico in seventh, and Turkey in tenth. Snapchat’s global reach, then, should not be underestimated, despite its US-ward tilt.

Snapchat users by country, July 2019

Snapchat users by country July 2019

Source: Statista

Snapchat users in the US

Snapchat is one the most-popular social media channels in the US, nearly a quarter of American adults stating they used the channel in 2019 – putting it ahead of Twitter and WhatsApp (albeit in a relatively weak market for WhatsApp).

US Snapchat penetration is down, however, on 2018’s figure of 27%, with LinkedIn moving ahead in ubiquity.

US Snapchat penetration vs. other popular apps

Souce: Pew Research Center

In light of the year-on-year decrease reported in Q1 2019, eMarketer downgraded their expectations for Snapchat’s performance in the US. Following the controversial redesign of 2018, Snapchat user growth certainly stagnated in its home market, as it did across the world.

eMarketer predicted that Snapchat will lose US users over 2019 for the first time, with a 3% reduction, with the following years seeing very small levels of growth. Over this period, we will also see penetration among internet users reduce (as the Pew Research Center suggests occurred between 2019 and 2018).

In 2018, Snapchat users accounted for 40% of US internet users – by 2023, in this estimation, this will have reduced to 35%. Absolute numbers will stay relatively level after 2019’s dip, with absolute growth of 0.6 million between 2019 and 2023.

Whether the improved performance in Q2 2019 will mark a turnaround or a blip remains to be seen.

US Snapchat user forecast

US Snapchat user forecast

Source: eMarketer

Pew Research Center data also gives us some other insights in who uses Snapchat in the US. We can see that Snapchat usage in its home market is split evenly between male and female users, with 24% of both using the app (all percentages below are of total users falling into each demographic bracket).

Snapchat usage seems to be most prevalent in lower income brackets – which when we consider the age of users (see below) checks out, given the lower earning potential of those who have not long been in the workforce. There’s a spike in usage among those who have attended some college, though again, this chimes with age demographics, with many users likely to still be midway their college degrees.

As with most apps, we see a higher level of usage among urbanites – which makes sense given the fast-paced and highly social nature of Snapchat. The gap is, in proportional terms, particularly pronounced here. Interestingly, Snapchat usage is pretty even between rural and suburban users.

US Snapchat user demographics

US Snapchat user demographics

Data source: Pew Reseach Center

Snapchat users by age

The core user group of Snapchat are Generation Z, seemingly.

According to Pew Research Center social media statistics, Snapchat usage (like Instagram) is concentrated among younger users in the US, with 73% of 18-24 year olds using the app. By the next demographic up (25-29), Snapchat usage has fallen to 47%. It carries on falling as we go up the age groups (25% of 30-49 year olds; 9% of 50-64 year olds, and a mere 3% of over 65s).

Snapchat usage by age group vs. other social media 

Snapchat usage by age group vs. other social media 

Source: Pew Reseach Center

2018 eMarketer Snapchat stats show 94% of American social media users age 18-24 use Snapchat , overtaking those aged 12-17 (92%). The penetration rate for those aged 25-34 is 56%. A greater percentage of females use Snapchat, commensurate with global trends – if not with the Pew Research Center stats reported above.

Snapchat users by age

Source: eMarketer

A study published by Marketing Charts, focusing in on that 12-17 bracket, finds that Snapchat remains the preferred social media platform with US teens, 41% of whom elect the app as their favourite, compared to the 35% who choose Instagram – though the gap does seems be narrowing, with the widest gap reported in 2017.

The story, however, is not as simple as a long-term lead being slowly eroded – indeed, back in spring 2015 when this graphic begins, Snap’s 11% looked nothing like threatening Instragram’s share of 29%. Something happened, however; by Spring 2016 Snapchat had caught up, and has led fairly comfortably since then.

It’s worth noting, however, that things can change quickly with this demographic as it grows, fashions change, and new blood takes the place of old (perhaps even more so than other demographics).

These two apps are well out in front, with a mere 6% a piece reporting that they favoured Twitter and Facebook (the former taking a big hit since 2015, at which point 21% of US teens choose the app as their favourite).

US teens’ preferred social media

US teens' favourite social platforms

Source: Marketing Charts

While the Snapchat demographic is typically young, and the app has long been demonstrably the preserve of Millennials and Generation Z, growth in older Snapchat users has increased in recent years.

Spiegel has previously commented that targeting older users is the best way to ensure Snapchat continues to thrive. Indeed, the redesign was seen to have had a positive effect in terms of the retention of older users. It has been said since, however, that it was a renewed focus on younger users which lead to Snap’s recovery of H1 2019.

eMarketer forecasts (from 2017) show far higher growth in Snapchat user numbers among older user groups than in the established core audience.

Snapchat users by age

Snapchat users by age

Source: eMarketer

Snapchat users demographics

Unlike the closer balance we see in the US, globally the Snapchat user-base skews female, who account for six out every 10 users, according to Statista.

Global Snapchat users in July 2019, by gender

Global Snapchat users in July 2019, by gender

Source: Statista

Snapchat Originals viewing figures

Snapchat’s drive into producing original content seems to have been a success.

In 2018,  Snapchat Originals series Endless Summer (a reality-series staring YouTuber Summer McKeen) reportedly drew in 28 million viewers. The series was duly commissioned for a second season beginning in 2019.

It’s not the only Snapchat Originals series to boast impressive viewing figures. Observer reports that Dead Girls was watched by 14 million people, and Deep Creek by 18 million.

In July 2019, it was announced that a range of uber celebrities, like Serena Williams and Arnold Schwarzenegger, would be partnering with Snapchat to create shows for Snapchat’s streaming offering.

Snapchat Lenses user stats

Advances in AR have been credited for powering (to some extent) Snapchat’s recovery of 2019.

Snapchat Lenses apply AR-powered filters to the real world being filmed through the camera. 200 million Snapchat users played with a new generation of AR Lenses within the first two weeks of their release, reported Snapchat in its Q2 2019 earnings statement (15 billion total plays were reported as April 2019, at a partner summit).

The number of Snapchat users submitting new Lenses over the quarter grew by 20% over the previous quarter, with over 500,000 Lenses created in total (a feature currently open only to US users).

In all, Q2 2019 saw more engagement with Lenses than was seen in entirety of 2018.

Other AR and AR-related features announced at the partner summit included Scan (a utility platform than can solve maths problems or generate GIFs based on the objects it scans), AR Bar (to help users discover and browse Lenses), Landmarkers (which ‘animate’ famous landmarks around the world), and Creator Profiles (self-explanatory!).

In 2018, Snap introduced Shoppable AR Lenses, which allow users to make direct purchases through the app.

Snapchat user behaviour: retail 

To demonstrate the level of targeting possible through its advertising platform, Snap Inc. released a series of Snapchat user behaviour statistics pertaining to its users’ relationship with the world of retail.

One such dataset looked at Snapchat user behaviour related to ‘big box’ (i.e. large department) stores. This found that Snapchat users visited such stores twice a month on average, with 18-24 year olds the keenest shoppers during the week, and teenage users during the weekend.

Which Snapchat users shop in big box stores and when?

Which Snapchat users shop in big box stores and when?

Source: Snapchat

Before visiting these stores, it seems (broadly) Snapchat users like to fuel up by getting some food or a smoothie, while afterwards they head out to take care of themselves at the gym or the salon. They tend to supplement their shop by visiting smaller stores both before or after their shop in the big box store.

Snapchat users and big box stores: before and after

Snapchat users and big box stores: before and after

Source: Snapchat

Snapchat users who shop at big box stores are marked by certain key interests. If you see a Snapchatter eating a burger and listening to rock music using high-tech headphones, they are statistically likely to be a big box store shopper.

Big box-shopping Snapchat users: other interests

What do big box-shopping Snapchat users like?

 

Source: Snapchat

Another dataset shows that Snapchat users who shop in luxury stores tend to visit such stores on Saturdays, and tend to be in the 18-24 bracket. They prefer to go towards the end of the month – something to do with payday perhaps?

Which Snapchat users shop in luxury stores and when?

Which Snapchat users shop in luxury stores and when?

Source: Snapchat

Casting a little doubt on the payday theory, it seems students are prominent among luxury-shopping Snapchat users (though students may have jobs too) – with universities & colleges and libraries both featuring in the ‘before’ categories, along with the more-predictable airports.

Afterwards, these Snapchat user behaviour stats suggest that they like to hit the town: be it music venues, bars, or night clubs.

Snapchat users and luxury stores: before and after

Snapchat users and luxury stores: before and after

Source: Snapchat

Unsurprisingly, these users enjoy drinking wine. They are also into vegan and organic food, and running…

Luxury-shopping Snapchat users: other interests

Luxury-shopping Snapchat users: other interests

Source: Snapchat

Changing the focus to Snapchat user behaviour stats pertaining to apparel shopping, we once again find 18-24 year olds preeminent, with an impressive eight store visits per month.

Which Snapchat users shop in apparel stores and when?

Which Snapchat users shop in apparel stores and when?

Source: Snapchat

Like big box store shoppers we are likely to find them eating a diverse range of cuisine before they go shopping; when they’re finished shopping for clothes we find them…doing more shopping, of course!

Snapchat users and apparel stores: before and after

Snapchat users and apparel stores: before and after

Source: Snapchat

Fashion-loving Snapchat users are lovers of arts & culture, yoga, and coffee – which presumably they need to power them through those epic shopping trips.

Apparel-shopping Snapchat users: other interests

Apparel-shopping Snapchat users: other interests

Source: Snapchat

Snapchat Usage Statistics

3.5 billion snaps are sent every day, announced Snapchat in its Q2 earnings report. This represents a return to level of Snapchat usage first seen in Q3 2017, before a drop off in daily usage levels to 3 billion Snaps per day in Q3 2018. Prior to this we had seen levels rise from 2.5 billion snaps per day in Q3 2016 to 3 billion in Q1 2017.

Snapchat Stories are reportedly viewed 10 billion times a day. 25% of Snapchat DAUs upload stories daily to the platform. These stats, however, date to 2016 and 2017 respectively, with no more recent data available.

To put these numbers in perspective, Twitter users send about 500 million tweets a day, while on Facebook 293,000 statuses are updated, and 136,000 photos are uploaded every minute.

As a side note, Snap Inc. reported in Q2 2019 the new Android app had seen an average increase of 7% in the average number of Snaps sent daily by new users.

US Snapchat usage frequency 

Figures from the Pew Research Center show that Snapchat daily usage is among the highest of any social app, with only Facebook registering a higher number of respondents who say they use the app several times per day. In all, 46% of respondents say they use the app several times daily – edging out Instagram’s 42%. This is certainly related to the faster-paced and ephemeral nature of Snapchat.

On the other hand, if we look at usage about once a day, Instagram’s 21% is in excess of those who say they use Snapchat once a day, giving the former the edge if we consider app usage once a day or more (63% to 61%).

US Snapchat usage frequency vs other social media

US Snapchat usage frequency vs other social media

Source: Pew Research Center

Snapchat daily usage stats

According to Daily Beast Snapchat statistics, users send an average of 34 Snaps per day, and spend 35 minutes per day using the app. Snapchat is secretive about such usage data, and the Daily Beast figure is based on leaked confidential data, covering April-September 2017.

The lack of official figures mean that there is huge variance in the figures reported on these metrics. For instance, eMarketer reports the average time per day on Snapchat is a mere 27 minutes, though their figure cover US adults only. On the other end of the scale, Similar Web report that the average US user spends just short of 50 minutes per day using the app.

As you might expect, the younger the user, the more frequently they log in to check their Snapchat. Nearly half of 18-29 years log in daily, declining rapidly as we climb age groups.

How often do US users check Snapchat, by age?

How often do US users check Snapchat, by age?

Source: Statista

When do users use Snapchat? 

In January 2019, Snapchat published the results of a survey it had commissioned from Murphy Research. One of the questions pertained to when users moving from one place to another used popular social media apps. We need to be careful, of course, with a survey commissioned by a company – and indeed, this one seems to show Snapchat as the most or joint-most used social app in each of the listed situations.

Perhaps, then, it is most edifying to compare it against itself. ‘On-the-go’ comes out on top, in terms of when users like to use the app, chosen by 32% of users, followed closely by ‘commuting’ (29%), and  more distantly by ‘travelling’ (24%). It seems, therefore, that Snapchat is best suited to those quick snatches of time, rather than longer or more habitual travel.

When do users use Snapchat vs. other popular social media: travel

When do users use Snapchat vs. other popular social media

Source: Snapchat

In terms of what else is going on while they’re using the app, hanging out with friends is unsurprisingly on top, with 34% of Snapchat users reporting they used the app in this situation. Shopping (19%) and social events (14%) see a bit less Snapchat usage.

When do users use Snapchat vs. other popular social media: social situations

When do users use Snapchat vs. other popular social media: situations

Source: Snapchat

In the final category of usage – which we might sum up as distractions or passing the time – we see the first instance in the survey in which respondents elect something other than Snapchat as the most popular option.

Facebook is the most-chosen app in all three of these situations. It (42%) and Instagram (37%) are more popular with insomniacs than Snapchat (29%), it seems. Snapchat is also the second-least commonly used app at home, with only Twitter scoring lower. We might note here, however, that it still registers 66%.

Only Facebook edges out Snapchat in terms of usage while waiting, however. In terms of when Snapchat users use the app, home is the leading option (as with all other apps), followed by while waiting, and when unable to sleep coming in in last.

When do users use Snapchat vs. other popular social media: distractions

When do users use Snapchat vs. other popular social media: distractions

Source: Snapchat

A slightly older study (from 2017) found that 80% of Snapchatters used the app while eating at a restaurant, 66% while shopping in a mall, 50% at gym, and 49% while at an airport.

What do Snapchat users use the app for?

A 2018 study conducted by the Knight Foundation, published on Engadget, revealed that 55% of students at 11 US universities used Snapchat as a news source – putting it behind only Facebook in this respect. 27% of survey respondents reported using Snapchat daily for news. A smaller side study found that this rises significantly if we look at high school students, 47% of whom use the app daily to get their news (it would be interesting to know the definition of news in this context…).

Across the wider US population, it is less prominent in this regard; 5% reported using Snapchat as a news source to the Pew Research Center.

The Snapchat/Murphy survey features a section looking at for what users used Snapchat compared to a handful of other popular apps.

The results are rather prosaic, inclined towards literal usage rather than deeper motivations – the likes of ‘talk to my friends’ and ‘play with lenses and filters’. The last is the only example in which Snapchat differs from Instagram, where users are keener to follow influencers and celebs.

It does, however, underline the importance of the AR to Snapchat’s success.

For what do users use Snapchat vs. other apps?

Why do users use Snapchat vs. other apps?

Source: Snapchat

How does using Snapchat make users feel?

The Snapchat/Murphy study also looked at how the app made users feel in comparison with other popular social apps.

The words which come up with association with Snapchat chime nicely with its brand proposition, with users reporting feeling silly, creative, and flirtatious, among other positive words.

Naturally, as a study published by Snapchat itself must be taken with a pinch of salt, but the results are interesting – except for Facebook and Twitter, both of which seem to make users feel isolated and lonely, among other things.

YouTube and Instagram, on the other hand, fare pretty well (with the exception of the self consciousness engendered by Instagram usage), with YouTube keeping users diverted and informed, and Instagram inspired and creative.

Emotions associated with social media apps

Emotions associated with social media apps

Source: Snapchat

Snapchat Revenue Statistics

Even while Snapchat was struggling to pick up users, revenue was steadily edging upwards in the tail end of 2018 (the second half of the year tends to be better for many apps). Record Snapchat revenue – at the time of writing – stats were posted in Q4 2018, coming to $389.8 million in total.

Snapchat revenue for Q2 2019 came to $388 million – very nearly beating the record figure. This came on the back of $320 million revenue in Q1 2019.

The Q2 Snapchat revenue figure represents a record high for the quarter, with year-on-year quarterly growth standing at 48%. It is comfortably in excess of the predicted $335-360 million forecasted by Snap Inc. in April 2019.

Snapchat H1 2019 revenue comes to $708 million – which is a 44% increase over the $493 million Snapchat revenue reported at the same point in 2018.

Snapchat revenue statement, Q2 and H1 2019

Snapchat costs and revenues, Q2 and H1 2019

Source: Snap Inc.

Predicted Snapchat revenue for Q3 2019 has been pegged at between $410-435 million – comfortably setting a new record and putting 2018’s difficulties squarely in the past. As we can see below, historically Q4 has been a big one in terms of revenue for Snapchat – so we might fairly expect the record to once again be smashed when we get the stats for the last quarter.

Snapchat quarterly revenue history, Q1 2015 – Q2 2019

Snapchat quarterly revenue

Source: Statista

Over the full-year 2018, Snapchat revenue came to $1.2 billion – the first time Snap’s annual revenue crossed into the 10-figure mark. This represented a 43% increase on 2017 Snapchat revenue. This is a considerable slowdown, however, on the (certainly unsustainable) 104% growth reported a year before – as we might expect from a difficult 2018.

As tends to be the case, North America dominates Snapchat revenue. Indeed, 2018 North American Snapchat revenue alone is greater than total 2017 Snapchat revenue. It, however came to account for a far smaller share of total Snapchat revenue than the previous year – dropping from 80% to 70%.

Both European and rest of the world revenue grew at a faster rate – particularly the rest of world, where Snapchat revenue grew nearly threefold. This brings it within spitting distance of European Snapchat revenue – perhaps it would not be a huge surprise to see a change in the order of things when the 2019 reckoning has been made.

Indeed, H1 2019 Snapchat revenue stats suggest this is already the case. Rest of the world Snapchat revenue stood at $47 million and $67 million over the first two quarters of 2019, coming to a total of $114 million in the first half of the year; Europe has generated $47 million and $61 million, a total of $108 million.

It certainly will be interesting to see how things stand when Snapchat’s H2 revenue figures are in.

Snapchat 2018 revenue

https://martechtoday.com/snap-topped-1-billion-in-revenue-in-2018-stabilized-user-base-in-fourth-quarter-230457

Source: Snap Inc. via MarTech Today

Europe seems to be a problematic region for Snapchat. It’s not just that it delivers relatively low revenue – but it also seems to deliver poor ARPU. As of Q2 2019, it stood at $0.95, compared to the rest of the world’s $1.20. The latter has delivered better Snapchat ARPU than Europe since Q4 2019 – clearly Snap is getting better value for money in this wide and diverse range of countries than it is in the mature markets of Europe.

Snapchat ARPU by region

Snapchat ARPU by region

Source: Statista

Despite the healthy flow of revenue into Snapchat, those of you who looked more closely at the costs and revenue chart above may well have noticed the considerable deficit at which Snapchat is operating.

This has been a long-running issue for the company, which pumps a huge amount of cash into R&D: $1.5 billion across 2017,  $772 million in 2018, and $452 million in H1 2019. Snapchat may be heralded for leading the way in terms of AR, but this most certainly comes at a cost.

Cost of revenue is also high: $419 in H1 2019, $799 million in 2018, and $717 million back in 2017.

We can see in the below graphic, however, that we are seeing an improvement in cost of revenue as a proportion of revenue. Year-on-year we saw a 22 point improvement between Q1 2018 and Q1 2019.

The figure for Q2 2019 stands at 55%, giving us a 22 point improvement.

The right part of the graphic shows us that infrastructure by far accounts for the greatest share of Shapchat cost of revenue.

Snapchat cost of revenue, Q4 2017 – Q1 2019

Snapchat cost of revenue, Q4 2017 - Q1 2019

Source: Snapchat via ZDNet

Snapchat quarterly losses, however, do seem to becoming gradually smaller, with Q2 2019’s $255 million loss well down on Q2 2018’s $353 million.

Q1 2017 stands out as an outlier, with Snapchat loss for the quarter coming to an eye-watering $2.2 billion. This follows disappointing sales figures around the time of the Snapchat IPO.

Spiegel has promised that 2019 will be the year when everything changes, but time is limited. In April 2019, the Financial Times gave Snapchat three years to become profitable, before it would have to seek fresh funds…

Snapchat quarterly losses, Q1 2015 – Q2 2019, $ millions 

Snapchat quarterly losses, Q1 2015 - Q2 2019

Source: Statista

Snapchat funding rounds

The company initially raised $485,000 in 2012, with Lightspeed Venture Partners leading the charge. This was followed by multiple rounds throughout 2013 and a substantial $485 million D series in 2014 from August Capital, Yahoo, GIC and Kleiner Perkins Caufield & Byers. In February 2015, it was reported that Snapchat was seeking to raise $500 million, taking it a valuation of $19 billion. In 2016 Snapchat raised $1.8 billion in a Series F round. On March 2, 2017 the company went public.

In November 2017, Chinese investment holding conglomerate Tencent acquired 12% stake of the company in the open market. Tencent does not have voting rights. 

Snapchat advertising

99% of Snapchat revenue was generated through advertising in 2018; up from 97% in 2017, and 96% in 2016, according to Snap Inc.’s annual report.

Snapchat began to monetise its platform by introducing ‘Discover’ in 2015. Discover allows users to browse media content from partners such as CNN, Cosmopolitan and others. Advertisers can buy ads that appear in-between this partner content. The pricing for these ads has fallen dramatically, with the previous rates starting at $750,000 per day. They’re now available from as little as $50,000.

Snapchat now also allows advertisers to purchase short video ads, called Snap Ads, at a much lower price point – the click-through rate for these ads is around five times as high as those for equivalent platforms, according to Wallaroo Media. June 2018 represented a low point in Snap Inc. CPM: $2.95 per thousand impressions – compared to $4.20 on Instagram and $5.12 on the Facebook mobile app.

The second half of 2018, however, saw a gradual increase in Snapchat ad price – the first since programmatic bidding was introduced, according to Investopedia.

Sponsored lenses are now the most expensive offerings – starting from $450,000, rising to $700,000 for special occasions, such as the Super Bowl. These can get big results. Taco Bell’s sponsored lens was viewed 224 million times.

Advertisers can also purchase six second unskippable ads which appear during Snapchat Originals episodes, or ads that appear periodically during Snap Games.

The word in the industry seems to be that Snapchat’s advertising platform has significantly, offering better targeting, better tracking, and a clearer focus on its core audience of Gen Z users – all of which adds up to better sales and higher pricing.

As of Q3 2018, Snapchat reported that ad impressions were up by 278% year-on-year. Despite still losing users at this point, we can see in this evidence of a tightening up of the ad business (though naturally being served up more ads may well have contributed to declining user numbers).

At a partner summit in April 2019, Snap Inc. unveiled a host of new features, aimed to further improve Snapchat’s advertising offering. These included improved AR and dynamic scanning to allow targeted content and third-party app integration. With regard to the last point, the number of partner apps was more than doubled over H1 2019.

Snapchat US ad revenue

eMarketer singles out US ad revenue, from 2017 and predictions going onwards to 2021. Growth in US Snapchat ad revenue registered at the ludicrously high level of 89% between 2016 and 2017 , before slowing to 21.5% the following year.

eMarketer predicts a higher level of growth for 2019, before a further slowdown over the next few years. In absolute terms, if this estimation is correct we’ll see $832 million in US ad revenue for Snapchat over 2019, rising up to $1.2 billion by 2021.

These predictions, it might be noted, were made at the same time as a prediction that we’d see a contraction in user numbers for Snapchat over the course of 2019 – so potentially tend towards to the conservative.

It also notes that Snapchat CPM fell below $10 (around $3-8) when it adopted programmatic selling, and has stayed there since.

Snapchat US ad revenues, 2017-2021

Snapchat US ad revenues, 2017-2021

Source: eMarketer

Snapchat market cap

Snapchat went public in early 2017, trading on the NYSE, and enjoyed a honeymoon period during which it was routinely valued at far higher levels than brands like American Airlines, HP, and Target. After its first day of trading in March 2017, it was valued at $30 billion (the IPO was $24 billion). Incidentally, that’s the same amount as Facebook reportedly considered buying Snapchat in 2016.

The difficulties of 2018, however, saw Snapchat’s market cap plummet, with mid-December 2018 representing the absolute nadir, with a market cap of as little as $6.5 billion. 2019, however, has been much more positive. At the time of the latest update of these Snapchat stats (early September 2019), the market cap stood at $21.7 billion. In July 2019, Snapchat’s market cap climbed as high as $24.4 billion.

Snap market cap history

snap market cap

Source: Macrotrends

Various contributing factors played a part in the decline in fortunes – slower-than-expected sales (as above), a crowded market (need we mention Instagram?), the declining user base, and the departure of various high-ranking executives.

Let’s not forget the redesign, and Kylie Jenner’s tweet which knocked over $1 billion off the valuation. Jenner was the not the only celebrity who caused Snapchat to lose $1 billion in 2018. Rihanna also called out the app for hosting a poll which made light of her domestic abuse at the hands of Chris Brown.

Snap Inc. did enjoy a 45% spike in February 2018, after reporting an extremely positive Q4 in 2017, with stock price reaching a high of $21.75 – not too far off the Snapchat IPO share price of $24. This wasn’t to last, as we know, with prices dipping as low as $4.99 in December 2018, before recovering to the slightly healthier level we saw at the time of writing ($15.79).

This confirmed a CNBC prediction that the stock price would soon bounce back.  Indeed, Snapchat’s performance over 2019 saw it outstrip every single member of the S&P 500, with 183% growth in Snapchat stock price in the first half of the year.

Improvements in user growth through targeting the core Gen Z audience, advances in augmented reality, and an improved Android Snapchat app (always considered a poor relation to the iOS version) have contributed to this bounce back – as well as incremental improvements to the app designed to keep users coming back.

Goldman Sachs raised its 12-month target for Snapchat stock to $18, from $13 in July 2019. Bank of America ($12 to $17) and BTIG ($15 to $20) have similarly upped their estimates.

Snapchat stock price history 

Snapchat stock price history 

Source: Yahoo Finance

Snapchat vs. Instagram Statistics

The history of Snapchat has been inextricably intertwined with the other major player in the image-based social media world: Instagram. The latter was purchased by Facebook in 2012 for $1 billion.

Getting that kind of attention from Facebook in the first place is a pretty good indication of the strength of the Instagram brand. That Facebook has has added a number of features to Instagram since then that parrot Snapchat is good indication of the strength of Snapchat’s. Snapchat features that have made it to Instagram under Facebook include Stories, direct messages, filters and more.

Unfortunately, just getting there first is not enough. Since launching in 2016, Instagram Stories has gone from strength to strength. Indeed, by mid-2017, it had more than double the number of daily active users than Snapchat as a whole.

Instagram Stories vs Snapchat total users

 

Instagram Stories vs Snapchat total users

Leaving aside Stories for a moment, it’s clear that Snapchat is perhaps never going to be able to compete with the Facebook-owned Instagram’s total user base of 500 million.

It’s not all one-sided, though. In a comparison between the respective merits of the two apps for marketers, Hootsuite determined that in some respects Snapchat was better for marketers.

In their approximation, Instagram boasts a bigger audience, a higher rate view for Stories (28%) due to the autoplay feature, cheaper ads, and better discoverability. Snapchat, on the other hand, has better filters (and AR capability), and allows for wider sponsorship campaign reach – giving the example of Gatorade’s Super Bowl campaign.

This involved a lens that allowed users to appear to be soaking themselves in the sports drink. It was viewed 168 million times and resulted in an 8% increase in purchase intent. It also notes that 70% of posts on Instagram are simply never seen.

It seems unlikely that Instagram will be looking over its shoulder any time soon, however, but Snapchat seems to be holding its own in its own not-so-little niche.

Indeed, a Snapchat-commissioned App Annie study found that in selected key markets, Snapchat consistently boasts a healthy share of exclusive users compared to other apps. Ergo the only way to reach them is through Snap.

For instance, in the US, 38% of Snapchat users are not Instagram users.

Snapchat exclusive reach in selected markets

https://forbusiness.snapchat.com/blog/snapchat's-unique-reach-around-the-world

Source: Snapchat

Final Thoughts

2018 was, on paper, a difficult year for Snapchat, which seemed to have be left behind by Instagram. What we didn’t know is that, quietly, Siegel and Snap Inc. were quietly building the platform into something more robust.

This robustness has come not a second too late, however; the app is compelled to follow the likes of Twitter into profitability if it is not going to be forced to go back to investors, cap in hand. Stock prices, however, have recovered since the desperate lows of late 2018, and user numbers are on the up once more.

On of key drivers of growth for Snapchat is its strong position in terms of augmented reality. Its Spectacles, for example, while obviously a luxury product, could well prove to be the first indication of what our digital futures may look like. We have also seen innovative features like Crowd Surf, which allows Snapchat users to stitch together videos shot from different vantage points, allowing forms of creativity that were not possible before.

Apple’s iOS 11 release marked the world’s biggest company’s entry into the augmented reality market, which was further consolidated by iOS 12. Snapchat has been alive to this, with filters and lenses available exclusively for iPhone X users. With AR seemingly becoming more and more ingrained in our lives, could this be how Snapchat completes its miraculous recovery from what seemed like the brink?