Feb 18 (Reuters) – Snap said on Wednesday its direct-revenue business has reached $1 billion in annualized revenue run rate, driven by growth in its Snapchat+ subscription service, as the social media company pushes into new income streams beyond advertising.
The company, whose direct-revenue portfolio spans Snapchat+, the Memories photo and video archive tool and in-app purchases, said its total subscriber count has surpassed 25 million.
Squeezed by dominant platforms such as TikTok and Meta-owned Instagram in a crowded social media market, Snap is turning to subscriber growth to boost revenue, particularly as some major clients scale back advertising on smaller services. Ad sales constitute a majority of the company’s revenue.
CEO Evan Spiegel had said last year Snap was in a “crucible moment” after its quarterly revenue growth slowed and outlined his ambition to make direct revenue “a durable multi-billion-dollar growth driver for Snap.”
The company said on Tuesday it would launch a subscription feature allowing creators to generate recurring income directly from their most loyal fans, beginning with a February 23 test involving a small cohort of Snapchat creators in the U.S.
Snapchat+, launched in 2022, offers customization features, including pinning best friends, custom chat wallpapers and AI-powered pet avatars Bitmoji Pets, to enhance user engagement and retention.
The company has said its total active advertisers on the platform rose 28% in the fourth quarter.
Daily active users of Snapchat rose 5% to 474 million during the quarter, but they fell by 3 million from the prior three-month period, the company said earlier this month.
Last month, Snap unveiled Specs, an independent subsidiary for its augmented reality smart glasses, in a bid to challenge Meta in the fast-growing wearables market.
(Reporting by Jaspreet Singh in Bengaluru; Editing by Shilpi Majumdar)
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