Snap CEO touts ad platform, predicts rapid growth even without new users or more engagement

Snap CEO Evan Spiegel on Wednesday said that the company’s previous forecast of multiple years of more than 50% revenue growth is achievable even without any additional user or engagement growth.

“The 50% number actually isn’t predicated on any further user growth or any engagement growth. That’s just looking at the steady state opportunity actually in terms of our inventory on our core platforms,” Spiegel said, speaking at the Morgan Stanley Technology, Media and Telecom Conference.

Peter Sellis, Snap’s senior director of ad products, said last week at the company’s annual investor day that Snap was “in a position to drive multiple years of 50% plus revenue growth.” Sellis explained that the growth is being driven from Ads Manager, the company’s self-serve ad tool.

Spiegel elaborated on Sellis’s comments, saying that Snap is used by approximately 50% of smartphones in the U.S. but accounts for only a single-digit percentage of the advertising market in the U.S.

“Because we have so much engagement on our platform, we have a lot of advertising inventory, and that abundance of inventory has meant that the price per impression, the CPM, is relatively low compared to other platforms,” Spiegel said.

The company can increase advertising revenue by growing its average revenue per user.

“When you look at it like that and you understand the depth of the engagement that we have and, of course, our ARPU relative to peer companies in the digital advertising space, that gives us a lot of confidence — market conditions not withstanding — that we’ll be able to execute against those goals,” Spiegel said.

Snap shares were down more than 6% late in the day, amid a broader market sell-off of tech stocks.