The number of Snap Inc. users was not as bad as expected in Tuesday’s revenue report, but Snapchat’s parent company is unexpectedly besieged in the only area where it should be successful.
SNAP reported lower-than-expected losses in the Q1, and 4 million new users since the end of the year, 2 Million more than Wall Street estimation. But Snap also pointed out that a heavily monitored figure, average revenue per user or ARPU declined consecutively across all regions, from $2.01 per user to $ 1.68 in the Q4. The Snap already has the weakest ARPU among social media companies, according to CNBC.
In the fourth quarter, Snap’s ARPU of $2.01 was compared to $7.37 for Facebook Inc. and $ 9.48 for Twitter Inc.
As Twitter has proven over the past two years, a social media service can survive without adding a ton of users, as long as it increases the revenue generated by each user. By Tuesday, bulls could reach at least spot to a huge growth rate in Snap’s ARPU, particularly in Europe and around the world, where Snap very much needs an enhancement.
But that changed in the first quarter, with ARPU’s growth reaching unprecedented levels outside of North America. In Europe, Snap said it collected 77 cents per user, an increase of 47 percent over the previous year, compared to 97 cents in the rest of the world, up by 68%. This is the first time ARPU growth in the rest of the world is below three-digit percentage gains, and Europe’s growth rate has gone from 57% in the previous quarter to 120% a year ago.
Shares of Snap, which initially rose more than 10% of the earnings announcement, declined before the start of the teleconference. The shares closed after the session, with a high of 2.5%.