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Snap’s Growth Strategy under the Microscope

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Snap (SNAP) is expected to release its 2Q17 earnings scorecard on August 10. Investors should be combing the upcoming report for clues on whether Snap’s growth strategy is working.

Snap stated in its IPO (initial public offering) documents that it would prioritize boosting its presence in its domestic market, the US (SPY), before it can embark on an aggressive overseas expansion.

The US is one of the top ten global advertising markets (QQQ). A breakthrough in this market can unlock tremendous benefits for Snap considering that the company is primarily funded by advertising.

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North America is main revenue contributor

As shown in the chart above, Snap generates the bulk of its revenues from North America, which includes the US, Canada, Brazil (EWZ), and the Caribbean. North American revenues reached $129.0 million in 1Q17.

In Europe (EFA) and the rest of the world, Snap generated revenues of $13.0 million and $8.0 million, respectively, in the last quarter. Snap excludes Turkey and Russia in its European report.

North America in the spotlight

Because Snap is prioritizing the US in its growth strategy, significant investor attention should be focused on revenues from North America and subscriber growth in the coming earnings report.

Snap had 71 million daily active users in North America at the end of 1Q17.

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