As it prepares specs for the masses, Snap’s fourth quarter shows revenue growth but fewer daily users

Snap is seeking to diversify its revenue streams, moving from a business model in which it largely seeks advertising revenue to one in which it can also make money through subscriptions and, eventually, hardware. The company’s latest quarterly earnings report shows that the company has so far had moderate success with this strategy.

In the fourth quarter, Snap’s revenue was $1.7 billion, up 10% year over year. Its average revenue per user also rose slightly (to $3.62 from $3.44). The company’s net income reached $45 million, up from $9 million the previous year, the company’s earnings report showed.

The company also continued to generate a significant amount of revenue from Snap+, the paid subscription service that the platform launched back in 2022. The number of subscribers to the service grew by 71% year-on-year, to 24 million.

While these numbers may indicate a company headed in the right direction, the earnings report also shows that the system had slightly fewer daily active users last quarter — falling from 477 million to 474 million. The report shows that these users declined in North America and Europe, while their number increased slightly in the rest of the world.

Reuters also reported that the company expects its revenue during the first quarter of this year to be lower than analysts’ previous estimates, as competition from Facebook, Instagram and TikTok eats into its advertising profits.

During an earnings call on Wednesday, CEO Evan Spiegel focused on the company’s newer offerings, including its recent efforts to charge users for Memories Storage — a feature that allows users to save and store their snapshots — and its plans to launch the spec later this year. The company has not released a public version of its augmented reality glasses since 2019. In anticipation of this event, Snap recently announced the creation of a new subsidiary, Specs Inc., which is focused solely on continuing the development of the glasses.

“Our long-term vision for augmented reality extends beyond the smartphone and into a future where computing becomes more natural, contextual, and seamlessly integrated into the real world,” Spiegel said. The CEO added that it was important to develop a “strong independent brand” for the spec, as he said the hardware product could appeal to a “different audience segment” than Snapchat’s “core audience.”

However, it appears that the strategy behind the specification may not be fully resolved yet. Later in the conversation, Spiegel continued: “We’re very close to launch, and the key here is actually, you know, stabilizing the launch and making sure that we’re delivering an exceptional product. And then, you know, I think we have a lot of flexibility to think about how we want to leverage [on] “It’s moving forward.”