Snap Inc.: Can Its Subscription Business Expansion Strategy Supercharge Growth?

Snap Inc.’s fourth-quarter 2024 earnings present a mixed bag for investors, showcasing both resilient growth and areas of concern. On the positive side, the company reported an increase in daily active users (DAUs), reaching 453 million globally, an increase of 39 million year-over-year. This user growth implies an expanding reach which could benefit long-term engagement and monetization strategies. The company’s revenue for the quarter grew by 14% year-over-year to $1.56 billion, driven by a robust direct-response (DR) advertising business and a rapidly growing Snapchat+ subscription service, which accounted for a significant portion of revenue, growing 131% year-over-year. These streams have also notably increased Snap Inc.’s adjusted EBITDA to $276 million, reflecting a 60% flow-through rate, and contributing to a positive free cash flow of $182 million.