ARPU under scrutiny
As Snap (SNAP) reports its 2Q17 results on August 10, ARPU (average revenue per user) is one of the metrics under scrutiny. Considering Snap’s strategy to drive growth in the domestic market before it can step up its international expansion, its North American ARPU is of great interest to many investors.
Looking back over the last several quarters, Snap’s ARPU has been trending upward on a year-over-year basis and in some cases, on a quarter-to-quarter basis across all reported geographies.
Worldwide ARPU nearly tripled
In 1Q17, for instance, North American ARPU came to $1.81, the highest of all three reported regions. The ARPU readings for Europe and Rest of World were $0.24 and $0.19, respectively in 1Q17, as shown in the chart.
Snap’s worldwide ARPU came to $0.90 in 1Q17, a sharp increase from $0.32 in 1Q16 but a drop from $1.05 in 4Q16.
North American subscribers
Because North American users generate more value (QQQ) for Snap, North American subscriber growth is also expected to come into sharp focus in the company’s 2Q17 report. Snap’s rivals Facebook (FB) and Twitter (TWTR) also generate most of their ARPU in North America, implying that this is a highly competitive region for these companies.
North America is one of the regions Snap uses to recruit new users at a rapid pace. The company added about 3.0 million new daily active users in North America in 1Q17, the same as in Europe (EFA). But it only added about 1.0 million daily active users in the Rest of World region.