The amount of money that Snap makes on each user is slowing waaay down.
Snap Inc.’s user numbers were not as bad as expected in Tuesday’s earnings report, but the Snapchat parent company is suddenly struggling in the one area in which it must succeed.
But that changed in the first quarter, as ARPU growth hit record lows outside North America. In Europe, Snap reported collecting 77 cents per user, up 47% from last year, and it was 97 cents in the rest of the world, up 68%. It is the first time that ARPU growth in the rest of the world has fallen below triple-digit percentage gains, and the growth rate in Europe fell from 57% last quarter and 120% a year ago.
“There are billions of Android devices in the world that now have access to an improved Snapchat experience and we look forward to being able to grow our Snapchat community in new markets,” co-founder and Chief Executive Evan Spiegel said on Tuesday’s call, adding later that the company was excited with what it was seeing from the Android rollout.
Ever since its IPO, Snap has been clouded by the view on Wall Street that the biggest growth in its user base was over, and that it went public after growth had peaked. The company must now monetize its users better, especially overseas, to get the kind of growth Wall Street is looking for, and its improved Android app and overcoming lags for the transition to self-serve ads are key to that potential.
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