Snap Doubles Down On AI But Continues Haemorrhaging Money

Snap Doubles Down On AI But Continues Haemorrhaging Money

Snap, the parent company of the photo-sharing app Snapchat, has hailed 2023 as a “pivotal year” for its development as a business with small gains in its revenue and net losses down by seven per cent.

Snap’s revenue climbed by five per cent in Q4 2023 to $US1.3 billion ($US2.01 billion( compared to Q4 2022. But its revenues remained flat when comparing the whole of last year to 2022 at just over $US4.6 billion ($AU7.05 billion).

Its operating losses, however, dropped by 14 per cent in Q4 2023 when compared Q4 2022 to $US248 million ($AU380 million). Over the course of 2023, Snap managed to lose $US1.32 billion ($AU2 billion) though this was down by seven per cent compared to 2022.

“2023 was a pivotal year for Snap, as we transformed our advertising business and continued to expand our global community, reaching 414 million daily active users,” said Evan Spiegel, CEO.

“Snapchat enhances relationships with friends, family, and the world, and this unique value proposition has provided a strong foundation to build our business for long-term growth.”

There was some merit to Spiegel’s spin with daily active users up by 10 per cent year-on-year and time spent watching Spotlight content (Snap’s creator platform) increased by 175 per cent and its monthly active users grew by 35 per cent.

Its Snapchat+ subscription service which offers exclusive, experimental, and pre-release features, reached over 7 million subscribers. Its “7/0 Pixel Purchase optimisation model” also saw a more than 90 per cent increase in purchase-related conversions year-on-year.

The company also highlighted the efforts it had made with AI during the year, including new AI-powered features for Snapchat+ subscribers, giving them the ability to enhance their Snaps and create and send AI-generated images based on a text prompt. It also partnered with NYX Professional Makeup to release Beauty Bestie, an interactive, AR- and AI-powered
sponsored Lens experience that recommends beauty products based on a Snapchatter’s aesthetic, mood and colour palettes.

However, the stock market was unimpressed by Spiegel’s assertion that it wasn’t all bad news. The company’s stock price dropped by a whopping 30 per cent after its results were released. It has now reported six straight quarters of single-digit growth or sales declines.

Earlier this week, Snap said it would cut 10 per cent of its global workforce, which equates to about 500 employees. A company spokesperson told CNBC in a statement that the cuts were intended to reorganize staff and “reduce hierarchy and promote in-person collaboration.” In mid-2022, Snap eliminated about 1,000 employees, or 20 per cent of its full-time workforce.

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