Snap Grows Paid Subscriptions But Quarterly Losses Keep Up Amid “Significant Headwinds”

Snap Inc. brought in $1.3 billion revenue and reported net losses amounting to $288 million to close out 2022 as it prepares for a worsening economy impacting its business.

“We continue to face significant headwinds as we look to accelerate revenue growth, and we are making progress driving improved return on investment for advertisers and innovating to deepen the engagement of our community,” Snap CEO Evan Spiegel, who described 2022 as a “challenging” year, said in announcing the results.

The fourth-quarter revenue results were essentially flat year over year, while the Q4 losses are a marked decline from the previous year, when Snap reported its first-ever quarterly profit of $22.5 million since going public in 2017. Daily active users grew 17 percent year-over-year to 375 million during the quarter, with grow taking place across North America, Europe and what Snap classifies as the rest of the world. The company also said users’ total time spent watching content on Spotlight, the company’s short-form video competitor to TikTok, grew by 100 percent year-over-year but did not disclose any specific viewership numbers. (Snap last said more than 125 million Snapchatters used Spotlight as of March 2021.)

Snap also saw its subscription product, Snapchat+, grow to 2 million paying subscribers roughly six months after launch. The product offers subscribers early access to new features for $3.99 a month.

But the economic outlook for Q1 is not expected to brighten, as Snap said it expects revenue to be down between 2 to 10 percent, according to a letter to investors. Revenue has thus far seen a 7 percent year-to-date decline in the current quarter.

Snap has frequently been likened to the canary in the coal mine for Wall Street’s tech and digital ad–dependent companies. Ahead of the major layoffs more recently impacting tech giants like Alphabet, Amazon and Meta, Snap cut roughly 20 percent of its employee base last August as part of a major restructuring that included the ending of its original programming, called Snap Originals. At the time, Spiegel said Snap would focus on three priorities: “community growth, revenue growth and augmented reality.” The third-quarter restructuring costs amounted to $155 million in the third quarter and $34 million in the fourth, the latter of which was reflected in the $288 million net loss figure.

Snap is hosting an investor day on Feb. 16 from its headquarters in Santa Monica with presentations from Spiegel and Chief Technology Officer Bobby Murphy, among others. The presentation comes after the tech company lost two of its top business executives to Netflix in September. Jeremi Gorman, formerly Snap’s chief business officer, and Peter Naylor, vp sales, are now at the streaming giant overseeing its advertising business.