Snap reports Q1 2024 results: growing user base and revenue diversification

Snap released its financial results for the first quarter of 2024 on April 25, 2024. The report highlights growth in both user engagement and revenue, with the company attributing this success to a focus on community building and advertising innovation.

Snap reported a 10% year-over-year increase in Daily Active Users (DAUs) to 422 million in Q1 2024. This growth is accompanied by a significant rise in content consumption. Time spent watching Spotlight content, a platform for user-generated short videos, surged by over 125% compared to the same period last year. Additionally, the Snap Star program, which features established content creators, has driven engagement in North America, with watch time for Snap Star Stories increasing by more than 55% year-over-year.

Snap is actively fostering user creativity by introducing new features like Creative Templates, longer video capabilities, and AI-powered AR Lens creation tools.

Snap is making strides in diversifying its revenue streams beyond advertising. Snapchat+ subscriptions, a premium tier offering exclusive features, have more than tripled year-over-year, exceeding 9 million subscribers in Q1.

Advertising revenue continues to be a core focus, with the company reporting an 85% year-over-year increase in the number of small and medium-sized businesses advertising on Snapchat. Snap is also seeing positive results from its 7-0 Pixel Purchase optimization model, leading to a more than 75% increase in purchase-related conversions compared to last year.

Snap is committed to improving its advertising platform for brands. The company launched a new and improved Conversions API (CAPI) that simplifies setup for advertisers and facilitates faster integration. Additionally, partnerships with Snowflake and other companies offer advertisers more campaign tools and deeper insights.

New advertising formats like Sponsored AR Filters allow brands to expand their reach through the Snapchat Camera, enabling users to interact with sponsored AR content before capturing Snaps.

Snap is prioritizing brand safety for advertisers by partnering with Integral Ad Science for third-party measurement and by introducing a first-party tool offering greater control over ad placement.

Snap remains committed to its AR platform. Investments in Generative AI models and automation have resulted in a more than 50% year-over-year increase in the number of ML and AI Lenses viewed by users. The company is also focusing on relationship-building AR experiences, like "Friend Lenses" and "Q&A Lenses," which have driven high sharing rates among users.

Improvements to the AR Lens carousel ranking system ensure a more dynamic discovery experience for users, with the number of new Lenses seen increasing by over 50% since launch.

Snap is also investing in developer tools, including a new AI Assistant in Lens Studio, a Compression tool for optimizing Lens size, and an Animation Curve Editor, all designed to streamline the Lens creation process.

Snap anticipates continued growth in its user base, projecting approximately 431 million DAUs for Q2 2024. The company's revenue guidance for Q2 is $1,225 million to $1,255 million, representing a year-over-year increase of 15% to 18%.

While investing in future growth initiatives, Snap expects Adjusted EBITDA to be between $15 million and $45 million in Q2.

Key takeaways for marketers

• Snap's growing and engaged user base presents a valuable opportunity for brands to reach a highly active audience.
• The rise of Snapchat+ subscriptions suggests a willingness among users to pay for premium features, indicating potential for further subscription-based monetization strategies.
• Snap's advertising platform advancements, including CAPI improvements and Sponsored AR Filters, offer brands more sophisticated tools to reach target audiences and track campaign performance.
• Snap's continued investment in AR development suggests promising opportunities for brands to leverage AR experiences in their marketing strategies.