SNAP: Revenue and users show strength again in the fourth quarter

In 4Q17, Snap released its best financial report since its listing: revenue and users regained accelerated growth, costs and expenses improved, and gross profit turned positive, which significantly boosted Wall Street's confidence in the company.

Focus on Android APP quality and performance, redesign products, and promote user recovery and growth

According to Snap's financial report, Snap's daily active users reached 187 million in the fourth quarter, an increase of 18% year-on-year, higher than the 16% year-on-year growth in the previous quarter. The year-on-year growth rate of users in other regions outside Europe and the United States reached 21%, and the company's products were popular among users in Asia, Africa and Latin America.

The company attributed the product's revival to the continuous optimization of the Android version's performance and quality, as well as the redesign of the product. The company said that the retention rate of Android users increased by nearly 20% year-on-year.

Revenue growth accelerated, with impressive revenue performance in the three major regions

In the fourth quarter, the company's revenue reached US$286 million, a year-on-year increase of 72%, higher than the 62% growth in the previous quarter. The revenue of the three major regions continued to grow rapidly, with North America, Europe, and other regions increasing by 50%, 167%, and 333% year-on-year respectively.

The accelerated revenue growth rate is mainly due to the company's promotion of programmatic buying (programmatic buying accounts for more than 90%) and the provision of more transparent effect evaluation tools to advertisers. At the same time, the seasonal placement of brand advertising has also played a major role in driving revenue growth.

The company's advertising exposure increased by more than 4 times year-on-year, and the effective CPM increased by 25% year-on-year (excluding promoted stories).

The company's small and medium-sized customer consumption growth is encouraging. In the fourth quarter, 50% of its revenue came from advertisers outside the Ad Age TOP100. Facing a market of more than 26 million small and medium-sized customers, the company believes that the future growth potential of small and medium-sized customer advertising is still huge.

With the improvement of advertising commercial monetization capabilities, the company's revenue from each user has also increased significantly. The global user ARPU reached US$1.53, rising to US$2.75 in North America and US$0.66 in Europe.

Cost growth rate was controlled and gross profit was significantly improved

The revenue growth and effective control of user costs have significantly expanded the company's gross profit margin, from 8% last year to 36%. The company's per capita monetization level increased by 46% to $1.53, but the company's per capita cost only increased by 2% to $0.98. Due to the adoption of a multi-cloud strategy, the company successfully reduced per capita server cost expenditure from $0.72 last year to $0.7 this year.

Although there is still a high growth compared with last year, the proportion of expenses has been significantly controlled compared with the previous quarter. Among them, the proportion of marketing expenses, management expenses, and R&D expenses in revenue decreased from 49%, 57%, and 115% in the previous quarter to 39%, 39%, and 82% in the fourth quarter respectively.

Despite the company's outstanding financial performance this quarter, Snap still lost $350 million in the quarter, but it was a significant decrease from $443 million in the previous quarter.

via: 199IT Financial Report Data Center, data is for reference only, please do not use it as a basis for buying stocks