Examining the Forces behind Snap’s Top-Line Growth
Top line posts 153% growth
Snap (SNAP) may have reported earnings and revenue results that were short of consensus expectations for 2Q17, but it’s hard to ignore the robust top-line growth the company registered for the quarter.
Snap (SNAP) generated $181.7 million in revenues in 2Q17, falling short of the consensus estimate of $189 million. However, Snap’s top line grew 153% compared with 2Q16. The chart below shows Snap’s revenue trend over the last five quarters.
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Expanding audience and programmatic ads driving gains
Strong advertising sales supported Snap’s recent top-line gains. Snapchat’s expanding audience and Snap’s use of automated ad selling are among the forces behind Snapchat’s rising profile as a preferred advertising platform for a growing number of marketers.
Snap noted that more than 50% of the ads it sold in 2Q17 were served programmatically, meaning through an automated ad selling method. The company said its advertising revenues increased 146% in 2Q17 over 2Q16.
Snap fighting for its space
Snap relies on ad sales for the majority of its revenues, and it faces stiff competition from Facebook (FB), Twitter (TWTR), Yelp (YELP), and Alphabet’s (GOOGL) Google in the online advertising industry.
The ad-fueled top-line growth Snap posted in 2Q17 suggests that the company is fighting for its space despite the strong opposition from its well-established rivals in the online advertising market.