Snap had another quarter of declining revenue in Q2, but ongoing growth in the number of users and advertisers on the platform has it hopeful about improved results in the future.
Revenue declined by 4% year-over-year, though it represents an 8% acceleration from the previous quarter. In North America, the company’s largest region, revenue was down 13%, with average revenue per user down 14%. Revenue was up 7% in Europe and 28% in the rest of the world.
Despite the earnings dip, CEO Evan Spiegel was pleased with how the company performed when it came to user growth and engagement. Daily active users grew by 14% year-over-year in Q2, with 2% growth in North America. Spiegel added that total time spent watching content increased globally. Total time spent with Snapchat’s Spotlight content discovery platform tripled year-over-year, with monthly active users for Spotlight growing by 51% year-over-year.
Now the goal is to generate a faster rate of revenue growth, which Spiegel said during a call with investors would come from three main priority areas: further deepening engagement, investing in direct response to deliver more ROI for advertisers and developing new revenue streams.
Since the beginning of the year, Snap has been changing its ad platform and machine learning models to drive more conversions. Spiegel said that was beginning to pay off, with the number of active advertisers on the platform growing by 20% year-over-year in Q2, with improvements to advertiser retention.
“In Q2 we made progress toward improving results for advertisers through machine learning model updates and infrastructure improvements, new ways of measuring and optimizing advertising spend, and new leadership for our go-to-market efforts,” Spiegel said. “We are encouraged to see that this progress is beginning to translate into improved results.”
On the new revenue front, the company topped four million users for the Snapchat+ subscription service. Spiegel also said that the company is “excited about the early progress” it is making on its new enterprise augmented reality services, offering AR development for clients to use on their own platforms. The company also topped 150 million users for its My AI chatbot, and has begun testing sponsored links.
Despite the optimism about long-term ad performance, the short term outlook is still cautious. The company forecast that revenue would be down by as much as 5% year-over-year in Q3, due in large part to a lack of visibility on how ad demand may perform in the current economic environment.
