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Bad Snap numbers highlight Facebook’s social media dominance

Snapchat OMG

Snap has released its results for the last quarter, with the over-arching lesson being Facebook is seemingly the only one that can make money from this social media thing.

Share price was down 13%, at the time of writing, as the steady decline since its IPO continues, after results were less than flattering. Daily Active Users (DAU) increased to 173 million, up 7.3 million from the previous quarter, though this was below the 175 million analysts were hoping to see, while revenue hit $182 million, also below expectations.

When comparing DAUs with the other big boys in the social media frenzy, it isn’t necessarily the prettiest of pictures. Facebook added 41 million DAUs sequentially, while Instagram Stories has added 100 million since January. 4% quarter-on-quarter growth is not great considering where the app is in its lifecycle. We’re not too sure what the direct comparison with Facebook would be, but we’d bet it was a lot higher that 4%. Twitter basically showed no growth in the same period, so it’s not all bad news, though for a variety of reasons, Snap will probably want to avoid comparisons to Twitter.

It would appear the only area which the team did exceed expectations was the net loss which increased to $443 million compared to $115 million in the same period of 2016. Bit careless of them. The hope here from investors is that Snap is in that growth phase, where it is building the walled garden in anticipation of the billions to be made off advertising in the future. It’s not a bad strategy, but Twitter has been in anticipation-mode for years, not really showing any promise of grabbing the billions. Snap will want to avoid being relegated to sit alongside this platform.

But, Snap does deserve some credit as well. Average revenue per user was $1.05 in Q2 2017, an increase of 109% over Q2 2016 when ARPU was $0.50. It’s a good increase, but still a relatively low number when you consider the potential revenues associated with this audience. When you divide total revenues by the number of DAUs at Facebook, ARPU stands at $6.94 for the quarter. The big boy showing us how it’s done.

In truth, the lesson learnt here is that you don’t really have to be innovative to be successful. We’re not saving Facebook is not innovative, but a lot of the feature updates on its platforms look remarkably similar to competitors. Snap has proven to be quite innovative over the last couple of months, coming up with some good ideas which have ‘inspired’ competitors, but that isn’t the issue here.

The difference is on the business side of things. Facebook knows how to make money, and is pretty much the only one in the world of social media which is actually generating serious cash. Facebook doesn’t seem to be ashamed about the fact it is pinching ideas from competitors, but we wouldn’t be either if we were making that much. Maybe this is a lesson which the Snap team should learn very quickly.


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