Snap’s Q3 advertiser count doubles amid AI and AR push

Strong Q3 performance for Snap: Snap, the parent company of Snapchat, reported impressive financial results for the third quarter of 2024, with revenue growth and user engagement surpassing expectations.

• Revenue increased by 15% year-over-year to $1.37 billion, beating Wall Street estimates
• The number of active advertisers on the platform more than doubled compared to the same period last year
• Daily active users (DAUs) reached 443 million globally, a 9% increase from the previous year
• Total time spent watching content on Snapchat grew by 25%

Direct-response advertising and subscriptions drive growth: Snap’s revenue gains were primarily attributed to two key areas of its business model.

• Direct-response advertising revenue grew by 16% year-over-year, contributing significantly to the overall ad revenue increase of 10%
• The Snapchat+ subscription service saw its subscriber base more than double, reaching 12 million users in Q3

Challenges in specific verticals: Despite the overall positive performance, Snap faced some headwinds in certain advertising categories.

• Consumer discretionary verticals, including technology, entertainment, and retail, showed weaker demand for advertising on the platform
• This softness in specific sectors highlights the importance of Snap’s diversification efforts and focus on small- and medium-sized businesses

AI and AR investments for long-term growth: CEO Evan Spiegel emphasized the company’s commitment to emerging technologies as a cornerstone of its future strategy.

• Snap expanded its partnership with Google Cloud to enhance generative AI experiences within its AI chatbot, My AI
• The number of Snaps sent to My AI in the U.S. more than tripled quarter-over-quarter
• In the AR space, Snap introduced Easy Lens, a tool allowing users to create Snapchat Lenses quickly using text prompts
• Over 225 million users engaged with Olympic-related AR experiences during the Paris Olympics, showcasing the potential for AR in major events

Expanding ad offerings: Snap continues to innovate its advertising products to attract more advertisers and increase revenue.

• Sponsored Snaps: A new ad solution enabling advertisers to send full-screen vertical videos directly to users
• Promoted Places: Allows brands to highlight locations on Snap Map
• The return of the Phantom House content series, featuring advertisers such as Hulu, State Farm, and Maybelline New York

Looking ahead: Snap’s forecast for the fourth quarter suggests continued growth, albeit at a slightly slower pace.

• The company projects revenue growth between 11% and 15% for Q4 2024

Balancing innovation and market realities: While Snap’s investments in AI and AR demonstrate its commitment to long-term growth, the company must navigate challenges in certain advertising sectors and maintain its momentum in direct-response advertising and subscriptions to achieve sustained success in the competitive social media landscape.