It is more of a mixed bag for Snap Inc. in its latest performance update: while it adds more users, not in its most lucrative markets, and revenue also increases, though not at the levels expected.

So goes the theme for Snap's performance- more of yin-yang styled strengths that are also weaknesses, in virtually every element.

First, on usage. Snapchat grew to 414 million daily active users in Q4, up 10% YoY.
Which is good, although as you can see, Snap actually lost a million users in North America, that is a big note over the holiday period.

It's been a story of déjà vu over the past year: nearly all the growth on the platform has been coming from "Rest of the World." Interest in India, part of its focus of its development push, is driving some of that growth; Snapchat claims it will shift its approach to more mature markets to fine-tune its efforts in the region.

Snap maintains that:

While we see strong long-term opportunity for community growth in Rest of World, we're investing more efforts in our more mature geographies such as North America and Europe into community growth. We have driven tremendous DAU growth over the last several years by focusing on performance in large emerging markets on Android, including India. We will continue building our momentum in the APAC region while pumping our investment further into improving the product experience for our community in North America and Europe, Parr shared.
Indeed, last week, Snap launched a new ad campaign in North America, in which it pitches itself as "the antidote to social media." 
Whether that will get more people using the app remains to be seen.

On the user engagement side, Snap says total time spent watching its TikTok-like Spotlight feed grew more than 175 percent year-over-year, while average monthly active users on Spotlight grew more than 35 percent year-over-year.

Which is no surprise given the broader popularity of short-form video, though it's also worth noting that Snap has discontinued funding for its Snap Originals programming, likely as a result of more interest in cheaper, user-generated content.
Instead of collaborating with Originals, Snap is going to work with popular creators on new initiatives and did see growth in that area, with public Stories posted by Snap Stars going up 125% year-over-year in the U.S. Snap is also looking to help creators translate popularity on the platform into brand deals as a way to establish a more sustainable process for sharing revenue with creators.

The company also remains AR to the core, as more than 350,000 creators and developers built close to 3.5 million AR Lenses for the app. On average, 300 million Snapchatters engage with AR every day. If Snap can convert that into expanded business offerings, that could still play a key role in its future.

Though it's taken a step back in that regard, too, as Snap's third-party AR development platform, ARES, stopped operating late last year as part of its cost-cutting measures. In other words, the greater challenge is its business struggles, which require revenue to sustain development but cost cuts to rationalize the business.
Snap brought in $1.36b in revenue for the quarter, up 5% year over year. Fairly decent considering overall market conditions, though not as strong as analysts were looking for.
Big issues for Snap, as it's noted, is that it's growing, but it's struggled to expand its audience in its key revenue markets. Usage in North America and EU has stayed relatively flat.
Snap's average revenue per user is not only considerably lower in the "Rest of the World" category, through which almost all of its expansion is being generated, but also has fallen over the past year. Again, therefore, while it is growing its audience, which should offer future opportunity, its current market potential isn't growing, reflecting poor capitalization on that growth.

That may be a sign that there's something fundamentally broken in the company's emerging business model. And according to CNBC, today's report also marked six straight quarters in which the app saw single-digit growth or declines.

Snap has potential, with 414 million active users, growing, and there should be more value there. But another problem for the app is that it's still not ageing up with its audience, and really hasn't been able to resonate much beyond its core demographic.
It's been trying to build on that, but so far, it's a niche audience-focused platform. Which is also something of a key strength in many ways, and something it has used in its pitch to ad partners in the past. But it also limits its business potential, with fewer brands looking to reach this market.

And with its AR ambitions apparently also coming under attack with layoffs and other cost-cutting measures, it would appear that Snap's opportunities are limited, at least for some time.

There was a time when it looked as though Snap would end up in the AR lead because its Spectacles glasses would eventually become AR. Now, however, the new kids on the block, Apple and Meta, are coming out of the traps running with AR offerings to which each of them has access to far larger resource pools to pump into the further development of their respective products; it's hard to see Snap ever catching up in this race.

Perhaps it can. Spiegel has also said its AR ambitions remain a core area of focus, even as the company cuts costs, though Spiegel has also spoken out against the broader metaverse push from Meta as a next iteration of connectivity itself.

So again, there are many contradictions within Snap, and for every positive, there's also a note of potential negative as well, maintaining its less-than-ideal market balance.

Is it a good future bet? To users, Snap remains an important connector, and an essential tool for teen connection in particular. But to investors, at least until it can get its revenue back on a solid track, it's less valuable.