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Ad revenue or subscriptions: What’s more viable to Snap’s success as a business?


Snapchat’s subscription game is shaping up to be one of the most compelling media storylines in 2025.

While subscriptions are still a modest slice of Snap’s revenue pie, they’re giving the company’s top line a noticeable boost. Case in point: Snap’s ad revenue climbed 10% to $1.25 billion in the latest quarter, but thanks to $123 million in non-ad revenue — largely from its membership program, Snapchat+ – The company reported a 15% increase in total revenue to $1.37 billion.

It’s a rare win for a platform that navigates an uncertain business model that relies heavily on hard-fought advertising dollars.

What sets Snap apart is its subscription approach. Unlike Meta or X, which rely on no ads, editing features, and platform support, Snap focuses on enhancing the user experience with exclusive, experimental, and preview features. In this way, Snapchat+ feels closer to the subscription models of Spotify or Duolingo than its direct competitors, creating a niche that actually works.

“The growth we’ve seen with Snapchat+ is a testament to the progress we can make by listening to our community and providing exclusive features that help enhance their creativity and deepen their connections with friends,” a Snap spokesperson told Digiday.

Jamie MacEwan, senior research analyst at Enders Analysis, explained: “Benefits such as badges, icons, early access and customization options are more akin to the features we see on social apps in China or Japan than the paid tiers that Western social networks. platform.”

Subscription by numbers

Snap said during its October earnings call that Snapchat+ reached more than 12 million subscribers in Q3, up from 11 million in the previous quarter and more than double the number a year ago.

While these numbers are impressive, it’s too early to call the subscription a definitive game changer for Snap. That said, the potential is hard to ignore. With a US $3.99 monthly fee, the average user pays $47.88 per year. Multiply that by 12 million subscribers, and Snapchat’s subscription business already brings in roughly $574.6 million annually — a number that’s hard to overlook.

In fact, on the current trajectory, CEO Evan Spiegel appears to be on track to hit his goal of $500 million in non-advertising revenue by the end of the year, according to a staff report. reported by The Information in January. Whether this upward momentum will be sustained remains to be seen.

Small but mighty

Despite the hype, it’s important to keep Snapchat+ in perspective—it’s still just a small cog in Snap’s broader revenue machine.

Take the third quarter, for example: Snap reported total revenue of $1.37 billion. With 12 million subscribers paying $3.99 a month, Snapchat+ contributed around $47.8 million – just 3.5% of the total. Looking ahead, Snap’s Q4 guidance estimates revenue between $1.51 billion and $1.56 billion. Even if Snapchat+ added another million subscribers, its contribution would still only be 3.3% to 3.4% of the total.

“Even as a second-tier platform, Snapchat still has 850 million monthly active users and 443 million daily active users,” said Max Willens, principal analyst at eMarketer. “With such a large user base, it would be very difficult for any company to deprioritize or even make advertising a secondary concern.”

Snap’s spokesperson also indirectly confirmed this to Digiday. “The vast majority of Snap’s revenue today continues to come from our advertising business, and we are focused on helping our video advertisers succeed through greater ML (machine learning). models, improving and scaling signals, improving our DR (direct response) platform and offering powerful ad formats,” they said.

However, advertising and subscriptions do not have to be mutually exclusive. As publishers have shown, they often complement each other. If Snapchat+ becomes more successful, it could revolutionize Snap’s business. Revenue growth could accelerate as more people sign up, providing a buffer against ad market volatility.

Result? A hybrid model that could underpin Snap’s future, combining stability with scalability in a way the platform has never seen before.

“With subscriptions doubling over the past year, they could actually be responsible for around half of the incremental revenue last quarter – that’s a great story, but it’s going to be harder to sustain over time,” MacEwan added.

Or to put it another way, supporting a subscription business isn’t easy, as Snap’s latest financial update suggests. Infrastructure costs per daily active user increased to $0.84 in the third quarter, up from $0.81 in the second. Much of this growth is tied to Snap’s investments in AI and augmented reality — key benefits offered to Snapchat+ subscribers.

“With a subscription-based business, you don’t want users to be upset, unhappy or miserable because that puts the subscription at risk,” Willens said.



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