Snap announced on Wednesday that its direct revenue business has reached an annualized run rate of $1 billion, driven by growth in its Snapchat+ subscription service. The social media company is actively expanding new revenue streams beyond advertising.
The company’s direct revenue portfolio includes Snapchat+, the photo and video storage tool Memories, and in-app purchases. The total number of subscribers across these offerings has now exceeded 25 million.
In a highly competitive social media market, where Snap faces pressure from dominant platforms such as TikTok and Meta’s Instagram, the company is turning to subscription growth to boost revenue. This shift comes as some major advertisers reduce spending on smaller platforms. Advertising remains the primary source of revenue for the company.
Last year, CEO Evan Spiegel stated that after a slowdown in quarterly revenue growth, Snap was facing a “critical test,” and set a goal for direct revenue to become a “sustainable multibillion-dollar growth engine” for the company.
On Tuesday, Snap announced the introduction of a new subscription feature that will allow creators to earn recurring income directly from their dedicated followers. The feature will begin testing on February 23 with a small group of Snapchat creators in the United States.
Snapchat+, launched in 2022, offers a range of customization features, including the ability to pin best friends, customize chat backgrounds, and access AI-powered Bitmoji Pets, all designed to enhance user engagement and retention.
The company reported that the total number of active advertisers on its platform grew by 28% year-over-year in the fourth quarter.
Earlier this month, Snap disclosed that daily active users on Snapchat increased by 5% year-over-year to 474 million in the quarter, though this figure was down by 3 million compared to the previous quarter.
Last month, Snap established a separate subsidiary named Specs, focused on developing augmented reality smart glasses, as it seeks to compete with Meta in the fast-growing wearable technology market.