In a now leaked internal memo, Snap’s CEO Evan Spiegel has explained to employees that Snapchat is aiming to reach $6 billion in revenue and 450 million users next year.
Within his letter to employees, Spiegel said “we saw challenges on the horizon, and hedged our bets accordingly, but still got punched in the face hard by 2022’s new economic reality”.
He added that “we didn’t anticipate the war in Ukraine, skyrocketing energy and food costs, persistently high inflation, and a more than 45x increase in the fed funds rate since last September. We have decisively entered a new era, and we must adapt and overcome to succeed in this new reality.”
How will Snapchat turn the ship around?
After being “punched in the face hard” recently, Spiegel has outlined how Snapchat will face the new economic reality. At the centre of his plan is for Snapchat to earn an additional $350 million in revenue from its new paid subscription service, which is already on track to hit four million subscribers by the end of the year.
On top of this, Spiegel has also told employees that Snap will focus on “increasing our penetration in at least one new large country or demographic” and onboarding more 30- to 40-year-olds. He added that funnelling more users into the Map and Spotlight sections of Snapchat “helps to make our service more compelling for our community, harder to copy, and more resilient to competition, and increases our monetization opportunity over the longer term.”
Similarly, Spiegel also confirmed that despite recent redundancies at Snap, the company remains committed to augmented reality, which he believes “represents the next major evolution in computing.”
Other highlights from the nearly 4,000-word letter, which can be read in full at The Verge, include:
- Snap aims to grow time spent on content by 10% per user in 2023
- The company wants 35% of users interacting daily with the Map tab of Snapchat every day next year
- Snap wants 30% of users on Spotlight (the company’s TikTok competitor) every day next year
- The company plans to make $6 billion in revenue and at least $1 billion in free cash flow in 2023
- Snap wants AR-based advertising to make up 10% of its total ad revenue next year
- The company wants to grow the number of people who use its AR effects (called Lenses) in other apps to 1 billion monthly users next year
- Snap is setting up an AR enterprise division to sell its technology to other companies
Snap’s plans for growth – the view from Spike
The economic realities of 2022 have forced businesses of all sizes to reconsider their plans. Financially, Snap has endured a poor year. The company’s stock price has plummeted rapidly and Snap also recently had to lay off 20% of its workforce. As part of this process, it cancelled its ideas for original shows, in-app games, and several other projects.
Although Snap has undoubtedly had a poor 2022, the company has found strength in adaptability. While the company’s revenue growth was flat in July, it has since increased to 8%. Now, it’s clear that Snap is targeting further strong growth in 2023 and beyond.
Of course, Snap has large volumes of cash to fall back on. However, in a wider sense, Snap’s pivot shows us the value of flexibility in such an uncertain economic environment. While we’re living in tough times currently, opportunities for growth will still present themselves. Agile businesses that can spot these trends and react quickly will come out stronger on the other side.