Despite its growth, and the digital ad market continuing to rebound, Snap still faces a challenging ad market, and reports from other tech companies have been mixed. Last week, Meta reported that its profit more than tripled, and it issued its first dividend. But Alphabet reported muted ad sales growth, and its search revenue and profit margin missed Wall Street’s expectations.
Over the past year, Snap has been pivoting its business to direct response ads, which let customers click to buy products. Mr. Spiegel said the ad-platform change prompted declining sales during the first half of the year. But, he said, it better positioned Snap’s advertising business for long-term growth.
Analysts, however, have said the app may struggle to find ground with that model, since users primarily use the app to message one another and don’t always see ads.
The company on Tuesday also pointed to successes with new services like Snapchat Plus, a subscription service available since July 2022 that costs $3.99 a month, which now has over seven million paid users. And it said that Snap Star, a creator program that started in early 2022, has lured many content creators onto platform with the promise of earnings from ads posted alongside their public stories.