Snapchat has posted its Q1 2022 performance update, showing steady increases in both users and revenue as the platform continues to solidify its niche in the social media landscape.
First off, on users – Snap added 13 million more daily actives in Q1 2022, taking it up to 332 million.
As you can see, the vast majority of that growth has come from the ‘Rest of the World’ category, with India, in particular, seeing solid ongoing take-up of Snap as mobile adoption continues to rise in the nation.
That’s become an increasingly important focus for Snap, and indeed, all social media platforms, with India’s massive population offering big opportunity for reach and growth, especially as the region’s digital evolution continues.
Though that doesn’t offer as much help on the revenue side, with the majority of Snapchat’s intake still coming from North American users.
Snap still has some work to do on this front, and that’s an ongoing concern with developing markets – expanding reach is one thing, but generating revenue is a longer-term prospect, that will likely require region-specific focus and products. Still, Snap’s numbers are steadily rising, and with more and more users to show ads to, that can only help to entice more ad partners to come on board, enhancing its prospects in this respect.
In terms of usage trends, Snap says that it‘s continued to see rising interest in its AR tools, with over 250 million Snapchatters now engaging with its AR elements every day. Over 250,000 creators have also now built more than 2.5 million Lenses via its Lens Studio and other creation initiatives, while Snap also notes that users ‘played with Lenses created by our community more than twice as much this quarter when compared to Q1 2021’.
The increasing interest in community created AR tools helps to expand Snap’s creative elements, and keep it on top of the latest trends, while the focus on AR will also help Snap evolve into the next stage of digital connection, and keep up with the bigger players in the space.
Which is really where Snap can win out – while Apple and Meta have far more resources at their disposal, Snap has repeatedly shown that it’s far better than them at staying in touch with key trends, and building AR features that appeal to its user base. Most of the viral AR trends over time have stemmed from Snapchat, and if it can maintain that nous, in line with the advancement of its AR creation tools, that will help to ensure that Snap remains a key leader in the AR space, even if Meta launches its own AR glasses sooner, in an effort to dominate the space.
Snap’s also working to develop more innovative AR, and potentially VR tools via its Bitmoji avatars – and it’s worth noting that Snap’s leadership team has used 3D Bitmoji characters as their profile pics in its Q1 report within this context.
Snapchat’s also working to stay up with the short-form video trend, and says that its own Spotlight offering has seen solid user response.
“We are very excited about the long-term potential of Spotlight. While still early in its growth and evolution, we’re pleased with the engagement we’re seeing, with total time spent growing 230% year-over-year. We observed a 350% increase in the number of Spotlight submissions using creative tools or Lenses compared with Q1 2021.”
It’s amazing to see how short-form video has become such a dominant element, and how habitual behaviors have changed user trends in most social apps. Whether Spotlight can become a key consideration within Snap remains to be seen, but really, it doesn’t have to, it just has to work as a supplementary element to help creators build within the app, as opposed to shifting off to other platforms to stay up with the same trends.
Snapchat also notes that its Discover and publisher content has continued to see strong adoption, with total daily time spent by Snapchatters aged 25 and older engaging with such increasing by more than 25% year-over-year.
Snap’s audience is getting older, another key point of note, and it’ll be interesting to see how Snap continues to evolve its offering to appeal to this older cohort over time, and whether it can maintain its appeal with younger audiences concurrently in the app.
Snap also notes that six of its Discover partners reached over 100 million global viewers in Q1, underlining its place as a key platform for emerging entertainment formats.
In terms of revenue, Snapchat saw a 38% year-over-year increase in revenue intake, reaching $1.06 billion for the quarter.
Snap says that it did see some impact here due to the invasion of Ukraine, with advertisers slowing their campaigns due to the conflict.
“In the days immediately following Russia’s invasion of Ukraine on February 24, we observed that a large number of advertisers initially paused their campaigns. The vast majority of clients resumed their campaigns within 10 days following the invasion, and daily average revenue in March exceeded pre-invasion levels, but the rate of year-over-year growth remained below pre-invasion levels at approximately 32% from February 24 through the end of Q1.”
A key revenue highlight for the quarter was Snap’s Dynamic Ads, which enable advertisers to upload their product catalog, from which Snap’s system can then match users with the most relevant product and ad formats based on user interests.
Snap says that revenue from Dynamic Ads has more than tripled year-over-year, as more businesses upload their product catalogs to the platform.
“By dynamically building ads from product catalogs, we’re able to greatly expand the set of ads that are created. Dynamic Ads can update automatically as new products are entered into the catalog, remaining up to date and driving ROI.”
That could be another consideration for your marketing process.
The only other major point of note in Snap’s earnings announcement was this:
As Snap continues to expand into new markets, so too do its costs, while its efforts to keep up in the AR space are also driving its R & D expenses higher, which is a constant challenge for the app.
I mean, it’s a constant challenge for any organization, but as Snap looks to keep up with the bigger players, the impact on its bottom line is, on balance, more significant – though it does show that Snap’s continuing to invest in its next level AR tools, including its coming AR-enabled Spectacles.
Which we got the slightest update on in Snap’s notes:
“Hundreds of creators are developing AR Lenses for Spectacles, building new immersive and interactive experiences, like reimagining a restaurant menu in three dimensions or enhancing a workout routine. We have continued to make software improvements and offer new capabilities for developers, including a new VoiceML template in Lens Studio, which enables creators to build voice-enabled experiences without scripting, and Lens Studio Streaming Mode, which helps creators develop Lenses with hand tracking from a first person perspective.”
Not much to go on just yet, but maybe we’ll get more specific updates about its evolving AR tools at its Partner Summit next week (4/28).
Overall, it’s a positive report for Snap – not amazing, it’s not blowing anyone away with these numbers. But Snap continues to grow, in all aspects, despite strong competition from other apps, and big challenges in its future development focus.
A key point is that Snap remains a leader in the AR space, and continues to refine its in-app offerings to align with user interests. It’s better at this than anyone, which will help Snap hold up against its more well-resourced competitors, even as they advance to the next stage.
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