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Snapchat added 4 million daily active users (DAU) over the previous quarter, reaching 190 million DAU — up from 186 million in Q4 2018, though still down slightly from its peak of 191 million in Q1 2018, per Snap's Q1 2019 earnings release.
Meanwhile, Snap revenue and average revenue per user (ARPU) each respectively jumped 39% year-over-year (YoY): Revenue reached $320 million in the quarter, and ARPU hit $1.68.
Here's what it means: Snapchat is showing renewed signs of life and making up some of the ground it lost after last year's botched redesign caused its user base to decline.
Snap attributed engagement growth to investment in mobile-first, premium content, which it plans to build out even further — especially in regions beyond the US.In particular, Snap will invest in its video and AR offerings.
- Video for Discover, including publisher Shows and Stories, along with Snap Originals. Snap is developing more Snap Originals, with 10 new original shows set to debut in May 2019. The app will also renew three of its most popular shows from the previous slate. In the past six months, Snapchat has made a global push around premium content: It more than doubled the number of localized media partners outside of the US, and in Q1 it launched 50+ new Shows and Publisher Stories in international markets. Snapchat now offers more than 450 premium content channels worldwide.
- New AR features. Snap is also creating new AR features (lenses and filters) developed both by its own team of engineers and the creator community via Lens Studio. In discussing new AR features, Spiegel said that the next step would be localizing AR experiences to different regions. For example, "Landmarkers" enables users to play with filters on major landmarks around the world like NYC's Flatiron Building and the Eiffel Tower in Paris.
The bigger picture: Future engagement and user growth could come from the new Android app redesign, which should help Snap tap into key emerging markets like India.
On the call with investors, Spiegel acknowledged that having a good Android user experience (UX) is "the price of admission to international markets." That makes sense, given Android's global dominance as a mobile operating system.
But North America is, and has always been, Snapchat's biggest market: As of Q1, the app counts 80 million DAU compared with Europe's 61 million, and 49 million across the rest of the world (ROW). And in North America — particularly in the US — iOS users are far more abundant. That's led Snap to prioritize the experience of its iOS users up until two weeks ago, when overhauled its Android app.
The move has already delivered a flutter of engagement growth. The Android app produced a 6% increase in the number of users sending Snaps within the first week of upgrading, per Snap's earnings report. If Snap can continue to strengthen its UX for Android users, it can ideally boost growth and ARPU in the regions that currently lag North American ARPU.
Presently, ROW users earn an average of $0.97 versus $2.81 for North American users. While we expect Snapchat to remain a niche product in North America that caters chiefly to a young base, we don't expect the region to power user growth. Instead, we believe the app will add most of its new users in emerging markets, which it only now has the ability to fully tap into, given its Android redesign.
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