Snap Inc. (NYSE:SNAP) CEO Evan Spiegel said the company’s subscription business has significant untapped potential, adding that it has only begun to capitalize on the opportunity.
During the earnings call on Monday, the CEO highlighted that fewer than 3% of its monthly active users currently pay for subscriptions, leaving “substantial room” to increase subscriber penetration over time through premium features, AI-powered creative tools, as well as additional subscription products.
Asked about the growth potential for Snap’s subscriber base, Spiegel said it’s still early for the company’s subscription business but noted that app-based subscription services across the industry typically achieve 7%–12% user penetration over the long term.
The CEO said the key to increasing adoption is continuously adding value to subscription offerings, highlighting the newly launched Lens+ and its AI-powered features as a major future growth driver.
The Snap CEO added that even Spectacles represent a massive long-term opportunity, with the potential to shift computing away from screens and into augmented reality in the real world.
Q2 Beat Fueled by Subscription Growth
Snap beat Wall Street’s second-quarter expectations, reporting an adjusted loss of 10 cents per share on $1.6 billion in revenue. The company also issued a stronger-than-expected third-quarter outlook, forecasting $1.70 billion to $1.74 billion in revenue and adjusted EBITDA of $300 million to $350 million.
Snap’s subscription products, including Snapchat+, Memories Storage, and Lens+, helped drive an 85% year-over-year increase in other revenue to $316 million in the second quarter, strengthening the company’s revenue beyond advertising. Spiegel even called it the “meaningful second revenue stream.”
Benzinga edge rankings indicate SNAP has a Momentum score in the 5th percentile and a negative price trend across the short, medium, and long term.
Price Action: SNAP closed 7.46% higher on Monday at $5.04 and rose another 7.17% in extended trading following the after-bell earnings release. On a year-to-date basis it declined 38.01%, as per Benzinga Pro.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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