Snap’s spreadsheets start to crackle as sales pop

Snap has always been pretty good at coming up with new ideas to engage consumers but making money was always its Achilles heel.

Jamie Davies

February 7, 2018

3 Min Read
Snap’s spreadsheets start to crackle as sales pop
Mobile Internet industry sees money being thrown about

Snap has always been pretty good at coming up with new ideas to engage consumers but making money was always its Achilles heel.

For the three months ending December 31 sales hit $285.7 million, an increase of 72% year-on-year, while for the year it was up to $824.9 million, a 104% increase. While these numbers might sound impressive, net loss for the year stood at $3.4 billion mainly down to stock rewards to its engineers. This compares to a loss of $500 million in 2016. We’re not quite sure what to say about that numbers.

“Our business really came together towards the end of last year and I am very proud of our team for working hard to deliver these results,” said Snap CEO Evan Spiegel. “We executed well on our 2017 plan to improve quality, performance, and automation, which removed friction from our advertising business and improved our application for the Snapchat community.”

Looking at the audience numbers, Daily Active Users increased 8.9 million or 5% sequentially to 187 million, while ARPU was $1.53 in Q4 2017, up 46% year-over-year and 31% sequentially. These improvements have been partly put down to improvements of the experience of the Android application, which Spiegel said increased retention rates by 20%. These improvements have led to increased engagement for the users, and also better value for advertisers.

Of course, the numbers are still pretty small when compared to the other social media giants but they are heading in the right direction. To take the next steps, Snap will be looking to continually improve application performance, while also partner up with telcos to reduce the bandwidth cost of the app. On the sexier side of development, Spiegel also boasts about moves into the world of augmented reality and content.

On the content side of things, the Wall Street Journal is reporting a partnership between Snap and NBC focusing on the Olympic Games. As part of the agreement, NBC will broadcast two- to six-minute live segments of key moments from the games. This is another interesting idea from Snap.

This is part of the problem Snap has been facing; it has never really been rewarded for the good ideas the team comes up with this. This highlights partnership is a good idea which will open up the brand to new audiences, but it is something which will be replicated by the bigger boys in the social media playground. For instance, the stories feature which so many people use on Facebook and Instagram, was originally the brainchild of Snap. You have to give credit to Snap for coming up with good ideas, but the cash reward is being realised elsewhere.

Should Snap be able to get enough partners involved with these highlights partnerships there could be rewards for the team. The next logical step could be into cinema trailers and promos, but it will have to prove it can hold onto the audience and the idea first and foremost.

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