Snapchat Parent Company Reaches $1B Revenue Milestone with 25M Subscribers

Snap Inc. announced Wednesday that its subscription-based revenue has reached a $1 billion annual rate, powered by over 25 million users paying for premium features. The social media company is diversifying beyond advertising revenue as it faces increased competition from TikTok and Instagram.

The parent company of Snapchat announced Wednesday that its subscription-based business has achieved a $1 billion annual revenue rate, marking a significant milestone as the platform competes with social media giants like TikTok and Instagram.

Snap Inc. reported that more than 25 million users now pay for various premium services, including Snapchat+ subscriptions, the Memories storage feature, and additional in-app purchases.

Facing intense competition from larger platforms owned by TikTok and Meta’s Instagram, the company has been working to diversify its income sources beyond traditional advertising revenue, which still makes up the majority of its earnings.

Last year, CEO Evan Spiegel described the company as being in a “crucible moment” due to slowing quarterly revenue growth, and expressed his goal to transform direct revenue into “a durable multi-billion-dollar growth driver for Snap.”

The company announced Tuesday plans to introduce a new subscription option that will allow content creators to earn steady income directly from their most dedicated followers. This feature will begin testing on February 23 with a select group of U.S.-based Snapchat creators.

Snapchat+, which debuted in 2022, provides users with exclusive customization options such as the ability to pin their closest friends, personalized chat backgrounds, and AI-generated pet avatars called Bitmoji Pets designed to increase user involvement and keep people on the platform longer.

The platform saw its total number of active advertisers increase by 28% during the fourth quarter of last year.

While Snapchat’s daily active user base grew 5% to reach 474 million users in the most recent quarter, the company noted a decline of 3 million users compared to the previous three-month period.

In January, Snap introduced Specs, a separate division focused on developing augmented reality smart glasses, as the company attempts to compete with Meta in the expanding wearable technology sector.