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Challenges And Opportunities For Snap’s International Business

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Snap growing fastest outside North America

Snap (SNAP) currently generates most of its revenue outside North America, though its fastest growth is in other markets. In the first quarter, its North American revenue rose 31.8% YoY (year-over-year), while its combined revenue from markets outside North America increased 185.7% YoY.

Barriers to Snap’s growth overseas include limited Internet access in many developing countries. Facebook (FB) and Alphabet (GOOGL) have been working to bridge the global connectivity gap through their Aquila and Loon projects, raising hopes that Snapchat could reach more people in developing countries quickly.

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Aquila modification could slow progress

As Alphabet’s X subsidiary has continued deploying its Loon technology, Facebook recently modified its Aquila project in ways that could slow down its progress and interfere with expectations for potential beneficiaries such as Snapchat.

However, Snap recently showed that its international expansion is not tied to what Facebook or Alphabet achieve or fail to achieve. In May, the company struck a deal with ad-technology startup Tyroo to help it reach more advertisers in India.

India is one of the fastest-growing emerging digital markets, with a digital advertising industry set to hit $5.6 billion by 2022. India’s digital advertising industry was estimated to be worth $2.4 billion in 2017, according to Statista.

Selling ads to e-commerce companies

The partnership with Tyroo could help Snap capitalize on ad spending by e-commerce companies fighting for a slice of the Indian market. Walmart (WMT) is gaining a majority stake in Indian e-commerce startup Flipkart for $16 billion, challenging Amazon (AMZN), which has lined up a $5.0 billion investment to grow its business in India.

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