Snap Revenue Breakdown By Region, Profitability And Margin

Social media companies. Pixabay Image.

This article presents the revenue and revenue by region of Snap Inc. (SNAP).

Apart from the revenue breakdown, we also look into the profitability and margin of Snap.

In terms of revenue by region, we look at Snap’s growth rates by region and the revenue share contributed by each region.

The geographical regions discussed here include North America, Europe, and the Rest Of World.

North America includes Mexico, the Caribbean, and Central America.

Europe includes Russia and Turkey.

However, effective March 2022, Snap has halted advertising sales to Russian and Belarusian entities

Let’s start with the topics below!

Total Revenue And Profit

Snap’s revenue and profit

For total revenue, Snap’s 2022 figure came in at $4.6 billion, a record high, and is 12% higher than that of 2021.

Also, Snap’s global or total revenue has been on a rise since 2018 and has grown at a compounded annual growth rate (CAGR) of 40% in the last 5 years.

For profitability metrics such as the adjusted gross profit and adjusted EBITDA, these figures are $2.8 billion and $378 million, respectively, for fiscal 2022.

They represent year-over-year growth rates of 18% and -39%, respectively, for fiscal 2022.

A trend worth mentioning is Snap’s rising adjusted gross profit which has grown at a compounded annual growth rate (CAGR) of around 60% since 2018.

While Snap’s adjusted gross profit grew 18% in 2022 year-on-year, its adjusted EBITDA declined significantly in the same period, down nearly 40% year-on-year.

Snap’s declining adjusted EBITDA in 2022 illustrates much lower profitability, driven primarily by higher operating expenses such as research and development, sales and marketing and general and administrative expenses in 2022 compared to 2021.

Gross Margin And EBITDA Margin

Snap’s gross and EBITDA margin

The adjusted gross margin and adjusted EBITDA margin measure Snap’s profitability.

In this case, these margins find out how much profit is retained after accounting for certain expenses.

That said, Snap’s adjusted gross margin has been on a rise since 2018 and totaled a massive 62% as of 2022.

On the other hand, Snap’s adjusted EBITDA margin came in at only 8% in 2022, a much smaller figure compared to the gross margin.

While adjusted gross margin grew slightly in 2022 from 2021, Snap’s EBITDA margin declined during the same period from 15% to only 8%, a nearly 50% tumble.

The significant decline in Snap’s adjusted EBITDA margin illustrates a much higher operating expense in 2022 compared to 2021 such as the R&D, sales and marketing, and general and administrative expenses.

Revenue By Region

Snap’s revenue by region

In terms of revenue or sales by user geographical region, we can see that Snap’s North America contributes the biggest amount of revenue to the company, notably at $3.2 billion in 2022.

Snap’s European region was at the second spot with sales totaling as much as $712 million in 2022.

The revenue from the Rest Of World region clocked $653 million in 2022, the lowest among all regions in the world.

A notable trend worth mentioning is Snap’s rising revenue in all geographical regions.

For example, Snap’s revenue from North America increased nearly 4-fold since 2018 while sales from Europe grew 283% over the last 5 years.

Revenue Share By Region

Snap’s revenue share by region

For revenue share by region, Snap’s North America contributes 70% of sales to total revenue in 2022, the largest among all regions in the world.

This ratio has been quite steady at roughly 70% between 2018 and 2022.

Snap’s Europe and Rest Of World contribute about 15.5% and 14%, respectively, of sales to total revenue in 2022.

These ratios also have remained unchanged over the past 5 years, illustrating the steady revenue contribution from these regions.

In short, Noth America has been Snap Inc.’s biggest market since 2018, with sales totaling $3.2 billion or 70% of total revenue in 2022.

Revenue Growth By Region

Snap’s revenue growth by region

For revenue growth by region, we can see from the chart that Snap did not perform really well in 2022 as revenue growth was down significantly for all regions in the world.

For example, Snap’s North American revenue growth in 2022 came in at only 8.8%, a far smaller figure compared to the 67.5% reported in 2021.

Similarly, Snap’s revenue growth in Europe also was down considerably in 2022, at only 13.4% compared to 57.4% reported in 2021.

Snap’s Rest Of World region revenue growth also experienced a similar downtrend in 2022, reportedly at 27% compared to 55% reported in 2021.

As revenue growth has slowed considerably in 2022, Snap has refrained from providing revenue and EBITDA guidance for the first quarter of 2023, citing operating uncertainties and challenges.

Summary

In summary, Snap’s revenue and profitability have been on a rise since 2018 as reflected in the rising revenue and rising gross profit as well as rising EBITDA in the past 5 years.

Snap’s improving profitability also is reflected in the rising adjusted gross margin and adjusted EBITDA margin since 2018.

Snap’s North America has been the company’s largest revenue contributor, generating up to 70% of the company’s total sales or $3.2 billion in 2022.

While global revenue and profit have been increasing in the last 5 years, they grew the slowest in 2022 across all regions as revenue growth rates were the lowest in 2022.

References and Credits

1. All financial figures in this article were obtained and referenced from earnings releases which are available in Snap Investor Relation.

2. Image by Gerd Altmann from Pixabay

Disclosure

The content in this article is for informational purposes only and is neither a recommendation nor a piece of financial advice to purchase a stock.

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