Snap Making More of Its User Base
The firm's lackluster user growth is indicative of a network effects moat source deficiency and supports our no-moat rating.
Snap’s total revenue grew 44% year over year to $262 million driven mainly by sales of significantly higher ad inventory which improved monetization and pushed average revenue per user, or ARPU, up 33% from last year to $1.40 during the quarter. While the daily average user, or DAU, count declined 2% sequentially, which according to management was due to a slower adoption of the app's redesign, DAUs did grow 8% year over year to 188 million. These growth rates demonstrate the difficulties faced by Snap when attempting to compete with Facebook's Instagram, which now has one billion users.
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