Snapchat’s Q4 fell short

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Expectations for Q4 were not a true snapshot of the results

Snapchat’s Q4 report shows increasing active users but still, its revenue fell short of expectations. The call transcript gave away the idea that the company may have suffered from continuous competition from other bigger digital media companies such as TikTok, Facebook, and Instagram.

In terms of revenue

In this most recent quarter, Snapchat’s Parent company, Snap reported $561 million in revenue. While this is an increase of “44% year-over-year,” the company also lost 49 million more than in the 2018 Q4.

However, revenue analysts were expecting Snapchat’s revenue to be at around $563 million for this period. Snap’s shares dropped more than 10% only hours after the Q4 report was released.

Snap CEO Evan Spiegel keeps his optimism in check as he placed an emphasis on the company’s core business. This core model is expected to grow the business and become more profitable in the future. 

Increased active users 

As recorded in the last quarter, snap had 210 million active users and has since increased to over 218 million monthly active users. This is the 4th consecutive year that Snapchat reported an increase to its user base. The number keeps climbing and this year, there’s a 2.58% increase in user growth. A little below the expected 2.62% increase. 

Despite the growth, there’s still a decrease in the ARPU (average revenue per user). The report has shown a 3% of the growth in ARPU. Though this was still under predictions.

Operating losses 

Business Insider reported Snapchat’s Q4 operating loss of $241 million. Compared to 2018 that’s a 49% increase. Much of this was due to a $100 million preliminary settlement agreement with the SEC on the company’s IPO. 

It’s time to put more focus on the ads

In regards to Snapchat’s ad platform, Spiegel stated, “we are getting better at increasing the value and relevance of each ad impressions.” crowded and anything snap can do to separate itself from the pack will be vital.

Snap’s Chief Business Officer, Jeremi Gorman, said that the company will now focus on diversifying its brand partners. Additionally, Snapchat is putting more effort into its AR-driven features that are expected to drive more brand partnerships. Snapchat has the ability to differentiate itself from other platforms due to its innate layout. It will be interesting to see how Snapchat reevaluates its ad platform moving forward. For more news like this subscribe to Holler Hustle.

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