FALCON POWERS – Snap Inc., the company behind the Snapchat application, reported higher-than-expected revenues in the first quarter of the year, reaching around $1.2 billion, a 21% increase year-over-year. However, the social media network for teenagers is facing difficulties in attracting advertisers.
In a statement released on Thursday regarding its financial results, Snap revealed that its quarterly losses decreased to $305 million in Q1, down from $329 million in the same period last year.
Snap’s CEO, Evan Spiegel, stated that the app’s value to the community and its advertising partners translated into improved financial performance. He highlighted that Snap has become increasingly meaningful to advertisers of all sizes due to its “large and growing audience” representing a hard-to-reach market, as well as its “brand-safe environment” and “full suite of advertising solutions.”
Jasmine Enberg, an analyst at eMarketer, commented, “I’ve been bullish on Snap for a while, despite the challenges it has faced in generating revenue,” as reported by Agence France-Presse (AFP). She added, “It took a while, but it’s clear that the hard work the company has put into its ad business is starting to pay off. Strong results may continue throughout the rest of the year.”
Evan Spiegel, who co-founded Snap in 2011, expressed satisfaction with the app reaching 750 million monthly active users during the past spring. The majority of these users range in age from 13 to 34 years and come from over 20 countries.
At the beginning of the year, the app had 422 million daily active users, an increase of eight million compared to the end of 2023. However, unlike Meta (Facebook, Instagram, WhatsApp), Snap has never been able to generate enough advertising revenue to achieve annual profitability.
In 2022, its net losses tripled to $1.43 billion. In 2023, the company slightly reduced the losses to $1.32 billion.
After gaining success with disappearing messages, photos, and short videos, which were features later replicated by competing apps, as well as augmented reality filters, the company began diversifying its services.
One of its notable moves in this direction was the launch of “Spotlight,” a platform dedicated to short and entertaining videos similar to those found on TikTok. Snap also introduced a paid subscription plan called “Snapchat+” where subscribers gain access to exclusive tools, including the AI-powered content generator.
