Snap continues to grow its user base with the release of innovative product features, but those features have come with a steep monetary cost. In its latest earnings call, Snap disclosed that it lost $241 million this past quarter on $561 million in revenue, compared to only $192 million in Q4 of 2018 on $390 million in revenue. It did manage to grow its daily active user base by 8 million this quarter, to reach 218 million. However, it’s asking for investors’ patience while it works on making its way to annual profitability, although Snap highlighted that it achieved adjusted EBITDA profitability this quarter.
In prepared remarks, Snap CEO Evan Spiegel said he’s confident in the company’s “long-term growth and profitability,” particularly as the company invests in “supporting real friendships on Snapchat,” expanding globally, augmented reality, and more content. He also points out that he believes the platform is “still extremely under-monetized” and that the company has a “large volume of high-quality advertising inventory” available, which could suggest that the sales team either isn’t effectively selling Snapchat as a valuable marketing opportunity, or that advertisers don’t see the worth when they have other social media platforms as options for ads. Spiegel says the team is investing in ad technology that’s more effective in targeting ads to specific users.
Generally, Snap has introduced neat product features, far ahead of other social networking platforms. It’s given users the ability to 3D paint on their selfies; is creating content based on users’ Bitmoji characters; and is still building its gaming features. The company is also working on ad products, like one it initially launched with Coca-Cola and McDonald’s that allows users to scan either of their logos for an AR experience. Instagram gives advertisers fewer and less flashy ways to reach people, but its scale makes up for that, giving them access to up to a billion users. Snapchat needs to scale if it wants its product features to make money.