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Snapchat Is Adding More Users, Topping 750 Million a Month

(Bloomberg) -- Snap Inc.’s social-media app is adding users at a faster clip, reaching more than 750 million per month, Chief Executive Officer Evan Spiegel said.

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That’s 25% more than the 600 million monthly users that Snapchat, known for its disappearing photo messages, was attracting 10 months ago. For the year through April 2022, the monthly count rose 20%, the company said.

“All of this was achieved as a result of the changes we made to our business and despite the deceleration to our revenue growth,” Spiegel said Thursday to an audience of investors at a meeting in Santa Monica, California.

Those investors were listening for signs that the company’s plan to shift its strategy is paying off. Snap last year said it was scaling back operations and narrowing its focus to three priorities: adding users and getting them to spend more time on Snapchat; jump-starting revenue growth; and investing in augmented reality technology.

The new numbers signal that the app can continue to expand its user base, which may help counter major declines in its digital ad business. In the first quarter, analysts expect the company’s revenue to post the first-ever drop from a year earlier, while the amount of money Snap makes per user is projected to fall to the lowest in almost three years.

The company has already said that the slide in digital marketing spending that’s hurt the industry for the past year is leveling off. Meanwhile, Snap is making changes to its ad offerings this year that may drag on revenue in the first quarter.

Snap and its peers are still dealing with the hangover from a 2021 change in Apple Inc.’s privacy policies that made it harder to personalize and track the success of digital ads.

The changes “upended about a decade of digital advertisers best practices” Spiegel said.

The growth failed to impress investors, who sent shares down 3% to $10.92 at 2:57 p.m. in New York. The stock had rallied 26% this year through Wednesday’s close after plunging 81% in 2022.

While Snapchat isn’t the biggest social media app — Meta Platforms Inc.’s Facebook and Instagram see about 3 billion and 2 billion users a month, respectively — it’s known for being especially popular among young people. In recent years, it has been competing for the attention of younger users with TikTok, the fast-growing video app owned by ByteDance Ltd., which has more than 1 billion people logging in every month.

To compete, Snapchat has been investing heavily in its subscription service Snapchat+ and AR lenses. Just six months after launch, Snapchat+ has 2.5 million subscribers and is on track for a $100 million annual revenue run rate. Additionally, over the past year more than 250 million users have engaged with Snapchat’s AR shopping lenses, the company said.

Bolstered by new product investments, Snapchat plans to reach 1 billion monthly active users in the next few years. Spiegel predicts the bulk of those new users will come from countries outside of developed markets like North America and Europe.

(Updates with subscription service users in the 11th paragraph.)

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