Putting Snap’s Subscriber Growth in Context
Snapchat audience grows 30 million year-over-year
Snap (SNAP) finished 2Q17 with more subscribers than it had entering the quarter, but fewer than expected. The company had 173 million DAUs (daily active users) on its Snapchat platform at the end of 2Q17, indicating that it added 7 million daily users over 1Q17. Snap gained about 30 million daily users over 2Q16.
Despite these gains, Snap still missed its subscriber growth target. Analysts on the average expected the company to exit 2Q17 with 175 million DAUs. The chart below shows how Snap’s subscriber base has changed since 2Q16.
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North America leads subscriber growth
Of Snap’s three reporting regions, North America registered the strongest subscriber growth. The company added about 4.0 million DAUs in North America in 2Q17, compared with about 2.0 million each for Europe (EFA) and ROW (Rest of the World).
Snap includes Mexico and the Caribbean in its North America reporting region. Similarly, the company includes Russia and Turkey in its Europe reporting region.
Snapchat registers improvement in user engagement
Not only is Snap onboarding more subscribers, it is also encouraging more activity among its audience. For example, the company noted that the average daily Snapchat user creates more than 20 messages a day, which implies a high level of user engagement.
The company added that users 25 years old and younger spend 40 minutes on Snapchat every day. This usage is ten minutes longer than the time the same demographic spends on Facebook’s (FB) Instagram, a Snapchat rival.
Marketers study a platform’s audience size and activity when deciding how to allocate their advertising budgets. So, a growing subscriber base and improving user engagement are positives for Snap as it battles Facebook, Twitter (TWTR), Alphabet’s (GOOGL) Google, and Amazon (AMZN) for marketers’ spending on online ads.