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Snap Inc.’s 483 Million Daily Users: Can Engagement Finally Translate Into Profitability?

Snap Inc. delivered a mixed first quarter that showed meaningful progress in revenue diversification, cost discipline and cash generation, while also underlining continuing pressure in parts of the advertising business. Total revenue rose 12 percent year over year to $1.53 billion, supported by strong growth in other revenue, which increased 87 percent to $285 million. Advertising revenue grew only 3 percent to $1.24 billion, reflecting better performance in direct response products and small and medium business advertisers, partly offset by weakness among large North American advertisers and geopolitical disruption in the Middle East. Management indicated that the Middle East impact was approximately $20 million to $25 million in March and is expected to remain a full quarter headwind in the second quarter if conditions do not improve. The investment thesis for Snap Inc.