While preparing Specs for the masses, Snap’s Q4 showed revenue growth but fewer daily users

Snap is on a mission to diversify its sources of revenue – moving from a business model that mainly pursues advertising revenue to one where it can also make money through subscriptions and, finally, hardware. The company’s last quarterly earnings report shows that, so far, the company has been moderately successful with its strategy.

In Q4, Snap’s revenue was $1.7 billionwhich is up 10% every year. Average revenue per user also rose, slightly (to $3.62 from $3.44). The company’s net income was $45 million, up from $9 million a year earlier, the earnings report showed.

The company also continues to generate significant revenue from Snap+, the platform’s paid subscription service relaunched in 2022. Subscribers to the service grew by 71% year-on-year, reaching 24 million.

While these numbers may indicate the company’s trajectory is headed in the right direction, the earnings report also shows the platform had fewer daily active users last quarter – down from 477 million to 474 million. Those users fell in North America and Europe, the report showed, while growing slightly worldwide.

Reuters also reported that the company expects revenue during the first quarter of this year to be lower than previous analyst estimates, as competition from Facebook, Instagram, and TikTok reduces advertising revenue.

During Wednesday’s earnings call, CEO Evan Spiegel focused on the company’s newer offerings, including new efforts to power user for Memories storage—a feature that allows users to save and store Snaps—and plans to launch Spec later this year. The company hasn’t launched augmented reality glasses since 2019. In anticipation of the event, Snap recently announcing the creation from a new subsidiary, Specs Inc., which focuses solely on developing these glasses.

“Our long-term vision for augmented reality extends beyond smartphones into a future when computing is more natural, contextual and seamlessly integrated into the real world,” Spiegel said. The CEO added that it was important to develop a “strong independent brand” for Specs, as he said the hardware product could appeal “to a different audience segment” than “the core Snapchat audience.”

That said, it looks like the strategy behind the Specs may not be complete yet. Later in the conversation, Spiegel continued: “We’re so close to launch that the key here is really just, you know, nailing the launch and making sure we deliver an amazing product.