Dive Brief:
- Snap revenue rose 15% year over year in the third quarter to $1.37 billion, per its latest earnings report. The gains beat Wall Street estimates and were attributed to the platform’s direct-response ads business and Snapchat+ subscription service.
- The Snapchat owner notably saw its total number of active advertisers more than double YoY in Q3. Daily active users (DAUs) reached 443 million globally during the period, an increase of 37 million YoY, while total time spent watching content increased 25%.
- Snap CEO Evan Spiegel in press details doubled down on the company’s investments in augmented reality (AR) and artificial intelligence (AI) as a means for long-term growth. The company forecasts revenue in the fourth quarter to grow 11% to 15%.
Dive Insight:
Snap is continuing this year’s hot streak with a 15% YoY revenue boost in Q3, strong results that follow similar gains observed by the social media platform in the first half. Still, despite beating Wall Street’s estimates, the platform reported continued weaker demand from consumer discretionary verticals including technology, entertainment and retail, per press details.
Despite that softness, Snap’s advertising revenue in Q3 grew 10% YoY to $1.25 billion, driven primarily from direct-response advertising revenue, which grew 16%. Such growth helped the platform more than double its total active advertisers YoY in Q3, a milestone that was also met via increased investments from small- and medium-sized businesses.
Snap also attributed revenue growth to the success of its Snapchat+ subscription service, which saw total subscribers more than double YoY to 12 million during the third quarter. Gains in broader use of the social platform were also reported, with DAUs growing by 9% YoY to 443 million. Over one billion Snaps were shared publicly on the platform each month during the period, an increase of 21% from the year prior.
Eyeing long-term growth, Snap CEO Spiegel expects the company’s investments in both AI and AR will fuel new consumer experiences and drive innovation across its ads business. The company has been stepping up its AI know-how this year, including with an expanded partnership with Google Cloud in September for additional generative AI experiences within the social platform’s AI chatbot, My AI. The number of Snaps sent to My AI in the U.S. more than tripled quarter over quarter in Q3.
On the AR side – a longtime focus for the platform — Snap in September revealed Easy Lens, a tool that allows users to build Snapchat Lenses within minutes via text prompt. Snap also revealed that over 225 million users engaged with over 25 custom Olympic-related AR experiences globally during the Paris Olympics, results that could drive advertiser spend to the platform for other tentpole sporting events.
Other recent efforts to widen its ad revenue stream include the addition of Sponsored Snaps, an ad solution that enables advertisers to send full-screen vertical videos directly to Snapchat users, and Promoted Places, which allows brands to highlight locations on the platform’s Snap Map. The marketer also brought back its Phantom House content series in October alongside advertisers including Hulu, State Farm and Maybelline New York.
