Snapchat earnings report reveals increase in users with weaker revenue

The platform’s Quarter four report for 2022 highlights the revenue generated, the new developments in augmented reality to expand the community.

Snap Inc. has released the Quarter four (Q4) Snapchat earnings report for the year 2022 that highlighted its increase in daily active users, the new content offered to build the community, the efforts to build sustainable profits and more.

Revenue and Daily Usage

• The year saw the platform bringing in 375 million daily active users (DAU) in Q4 with an increase of 17% year-over-year, with Snapchat+ gaining two million paid subscribers.
• It generated $4.6 billion of revenue with 12% growth, and generated $1.3 billion in Q4, or flat year-over-year.
• However, it reported a net loss of $1,430 million in 2022, compared to a net loss of $488 million in 2021. 
• It generated $55 million of free cash flow in 2022, achieving its second consecutive year of positive free cash flow. 
• The platform claims to have achieved sustainable profitability by generating $378 million of adjusted EBITDA in 2022.

The growth rate has slowed down as Snapchat tries to navigate around tighter advertising budgets, which the platform attributed to ‘rapid deceleration in digital advertising growth.’

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Advertising

The company updated its ad platform over the past year, across three key areas.

• Investing in observability and measurement.
• Improving engagement and conversion quality.
• Increasing the volume of high-quality engagements and conversions.

Snapchat has suffered from disruptions to its advertising business from Apple’s app privacy changes which require apps to get explicit permission from users to track them for advertising purposes and weaker advertiser demand amid fears of a looming recession. 

The major aim for the ad platform updates relied on delivering engaging experiences to users and improving business outcomes for its advertising partners. 

Evan Spiegel, CEO of Snap Inc. claimed that it will take time for these improvements to translate into improved topline growth. He also believes that delivering higher return on advertising spend and utilizing inventory more efficiently are critical inputs to gaining share of wallet, accelerating revenue growth, and realizing the full ARPU potential of its business.

New developments in Content and Augmented Reality

In Q4, Snapchat released Communities to expand its content offering, onboarded several new media partners, doubled down on its progress with Spotlight, and launched new Snapchat+ features, each of which helped drive engagement across the service. 

Over 250 million users engage with augmented reality every day on average, and Snapchat is investing rapidly in the future of AR to further expand its leadership position. 

In 2023, the platform plans to focus on executing three strategic priorities of growing its community and deepening their engagement with its products, accelerating and diversifying revenue growth, and investing in the future of augmented reality.