As it preps Specs for the masses, Snap’s Q4 shows revenue growth but fewer daily users

Snap is continuing its push to broaden its revenue mix — shifting away from a business almost entirely dependent on advertising toward one that also includes subscriptions and, eventually, hardware. The company’s latest quarterly earnings report suggests the strategy is making progress, though not without trade-offs.

For the fourth quarter, Snap reported revenue of $1.7 billion, representing a 10% increase year over year. Average revenue per user also ticked up modestly, rising to $3.62 from $3.44. Net income climbed to $45 million, compared with $9 million during the same period a year earlier, according to the company’s earnings release.

Snap has also continued to see momentum from Snap+, the paid subscription offering it introduced in 2022. Subscribers to the service grew 71% year over year, reaching a total of 24 million users.

Despite those positive signals, the report also revealed a slight decline in daily active users. Snap ended the quarter with 474 million daily users, down from 477 million in the prior quarter. The drop was concentrated in North America and Europe, while user numbers increased modestly in other regions.

According to Reuters, Snap also warned that its first-quarter revenue is expected to come in below analysts’ earlier projections. The company cited growing competition from Facebook, Instagram, and TikTok as pressure on its advertising business.

During Wednesday’s earnings call, Snap CEO Evan Spiegel emphasised the company’s newer revenue initiatives. These include a recent move to charge users for additional Memories storage—a feature that lets people save their Snaps—and plans to bring Specs to market later this year. Snap has not released a consumer-facing version of its augmented reality glasses since 2019. Ahead of the upcoming launch, the company recently announced the formation of a new subsidiary, Specs Inc., dedicated exclusively to developing the hardware.

“Our long-term vision for augmented reality extends beyond the smartphone to a future when computing is more natural, contextual and seamlessly integrated into the real world,” Spiegel said. He added that establishing a “strong standalone brand” for Specs is essential, noting that the product could appeal “to a different audience segment” than Snap’s core Snapchat user base.

At the same time, Spiegel suggested that the company is still refining its approach to monetising the glasses. Later in the call, he said: “We’re so close to launch that the key here is really just, you know, nailing the launch and making sure that we deliver an extraordinary product. And then, you know, I think we have a lot of flexibility to think about how we want to capitalise [on] it moving forward.”