Snap Inc.’s shares surged more than 7% in overnight trading on Monday after the technology firm reported second-quarter results that topped estimates, marking a rare post-earnings rally for the stock, which has been hovering near record lows.
Snap’s revenue increased 19% to $1.60 billion, marking the strongest growth rate in about two years and beating expectations of $1.54 billion. Daily active users grew to 493 million, up from 483 million in the prior quarter, while monthly active users rose to 971 million.
While investors praised the growth across key metrics, the company’s efforts to expand the business beyond its core advertising were a big draw. Snap’s other revenue, which includes sales from Snapchat+ and other subscription offerings, increased 85% to $316 million.
Snap launched Snapchat+ in June 2022 as a paid subscription offering exclusive features such as early access to new tools, customization options and AI-powered capabilities.
From a business perspective, it has been one of Snap’s biggest successes outside advertising, providing a fast-growing recurring revenue stream that has helped diversify the company’s business amid a volatile ad market.
SNAP Sees Subscription Opportunity
CEO Evan Spiegel said on Monday that the subscription opportunity was quite large and Snap was only scratching the surface. “Less than 3% of our monthly active users are paying subscribers, and we see substantial room to grow direct revenue over time through premium features, AI-powered creative tools, and additional subscription products,” he said.
“We have also built a meaningful second revenue stream. Snapchat+, Memories Storage, and Lens+ helped drive 85% year-over-year growth in Other Revenue to $316 million in Q2,” he added.
Snapchat+ has more than 25 million subscribers globally, the company disclosed in February, making it one of the largest consumer social media subscription services and contributing meaningfully to Snap’s “other revenue” growth.
Snap will hold a full launch event for its recently announced Specs AR glasses on Sept. 16 in Los Angeles.
Speiegel said: “On Specs, we've been overwhelmed at the extent to which I think our announcement really broke through. And there's just a huge amount of interest. What we're hearing from folks is really that they want to try Specs. It's obviously a high consideration purchase at $2,195.”
Retail View On SNAP
SNAP was among the top trending tickers on Stocktwits at the time of writing. The retail sentiment for the stock shifted to ‘extremely bullish’ from ‘bullish’ the previous day, amid ‘extremely high’ message volume.
“$SNAP such a massive beat. Should be minimum 20 bucks per share. Great job Evan for turning the ship around,” a trader. Another : “$SNAP It's really hard for a media company to improve in these times. Snap seems to have found a way.”
As of their last close, are down 38% year to date.