Image source @ Visual China
Text | Heterogeneous Finance, author | Snow at night
Since 2022, due to the conflict between Russia and Ukraine, as well as the impact of inflation and macro supply chains, some social media platforms mainly engaged in advertising business have been affected to varying degrees.
Recently, the social media platform Snapchat, Facebook parent company Meta, Twitter have released the latest quarterly financial performance report, so the performance of these three companies, whose performance is more eye-catching, whose future is more worth looking forward to?
Snap vs Facebook vs Twitter
First of all, in terms of revenue scale, FB is a well-deserved big brother, followed by Twitter, and Snap has the smallest revenue scale. Snap's revenue grew much faster than FB and Twitter year-on-year, and the gap between Snap's revenue and Twitter's was narrowing dramatically.
According to the data, in Q1 of fiscal 2022, Snap's revenue was $1.063 billion, Facebook's parent company Meta had revenue of $27.908 billion, including Facebook, Instagram, Messenger, WhatsApp and other app family revenues of $27.21 billion, and Twitter's revenue was $1.201 billion.
On the whole, Facebook's revenue scale is 26 times that of Snap, 23 times that of Twitter, from the quarterly revenue growth rate year-on-year, FB's growth rate has seriously slowed, Twitter's growth rate has also slowed down, Snap's growth rate is the fastest of the three.
Second, in terms of net profit, FB and Twitter remain profitable, and Snap is still in a state of loss.
Snap's net loss was $360 million in Q1 2022, compared to $287 million in the year-ago quarter, an increase of 25% year-over-year; FB's net profit was $7.4 billion; twitter's net profit was $513 million.
Finally, in terms of market capitalization, FB has the highest total market capitalization, and Snap's total market capitalization is higher than Twitter's.
As of the time of the release of Alien Finance, even with the blessing of Musk's acquisition of Twitter, Snap's total market value of $47.034 billion is still higher than Twitter's total market value of $37.499 billion. While Snap has yet to make the S&P 500 index, Snap will certainly have a place in the index.
Snap and Twitter are known to be traded on the New York Stock Exchange, and if Snap is traded on the NASDAQ, it can easily be included in the NASDAQ 100 index. Meta Platforms (FB, formerly Facebook), which trades on the NASDAQ, now has a total market capitalization of $558.460 billion, and because FB includes Facebook, Instagram and WhatsApp, the FB remains a giant in the social media space.
In the future, who is more worth looking forward to?
First of all, at present, the three sources of income mainly rely on advertising revenue, so the user situation is closely related to the operation of the platform.
It should be noted that Snap does not make a separate disclosure of advertising revenue in the financial performance report, but its revenue is almost entirely derived from the advertising business, so we can roughly consider the situation of its total revenue as advertising revenue.
Snap's latest earnings report disclosed that Q1 revenue for fiscal 2022 was $1.063 billion, up 38.1% year-on-year.
According to the financial report, Meta's advertising revenue in the first quarter was $26.998 billion, an increase of 6.1% year-on-year, which was lower than market expectations, and also lower than the year-on-year growth rate of advertising performance in various quarters of 2021, and the lowest level since the second quarter of 2021. Among them, the number of ad impressions of the app series in the first quarter increased by 15% year-on-year, and the average price of each ad decreased by 8% year-on-year.
According to the financial report, in the first quarter of 2022, Twitter's advertising service revenue was $1.107 billion, an increase of 23% year-on-year.
From the perspective of the quarterly year-on-year growth rate of advertising revenue, Snap has the fastest growth rate.
The growth of the advertising business is closely related to the size of the platform users and the degree of monetization of the user base.
The data shows that in the first quarter of fiscal 2022, Snap's DAU increased by 18% year-on-year to 400 million, and ARPU increased by 16.8% year-on-year to $4.06.
Meta as a social media behemoth, its user scale growth has tended to flatten, coupled with the competition of short video platforms such as TikTok, FB's active user growth rate has been greatly affected, in the fourth quarter of last year, the company's daily active user base decreased by 2 million. However, in the first quarter of this year, Meta's user activity growth rate exceeded market expectations. According to the financial report, the average daily active users in March were 1.96 billion, an increase of 4% year-on-year, and the average monthly active users were 2.936 billion, an increase of 3% year-on-year.
Meta's metric, average revenue per user (ARPP), a measure of the monetized user base, was just $7.72 in fiscal 2022 Q1, down from $7.75 in the same period last year and the lowest since Q4 2020.
According to the data, Twitter's DAU (monetizable daily active users) in the first quarter was 220.9 million, an increase of 15.9%; of which the average daily active users in the US market were 39.6 million, an increase of 6.4% year-on-year; the average daily active users in the international market was 189.4 million, an increase of 18.1% year-on-year.
Notably, Twitter admitted in its earnings report that it exaggerated the number of users as much as 1.9 million in three years. Twitter's earnings report revealed what it described as an "error" introduced in the first quarter of 2019 that "led to a high report on mDAU" that had not been detected in nearly three years. Twitter said that over the past year, the difference between the numbers reported by Twitter and the true counts was between 1.4 million and 1.9 million, or just under 1% of the total. However, Twitter did not provide a reconciliation of user data for most of 2019 or 2020, only releasing relevant data from Q4 2020 to Q4 2021.
In terms of international users, in the first quarter of 2022, Twitter's international DAU was 189.4 million, an increase of 18% year-on-year.
Affected by the Russo-Ukrainian war, in the European market, the Meta European market has an average daily active user of 307 million, which is inferior to 309 million in the same period last year; the average monthly active users are 418 million, which is inferior to 423 million in the same period of the previous year, which is also the lowest level since the first quarter of last year. On the earnings call, META expects global monthly active users to be affected by the withdrawal from the Russian market, and then global monthly active users will remain flat or even decline.
On the whole, in terms of users, Facebook and Snap's DAUs are higher than Twitter's, and Twitter's DAU has always been at a disadvantage from historical data.
Secondly, which of the three is more profitable for the future?
Overall, Snap's financial situation is developing in the right direction, its operating loss, and operating costs and expenses have a great relationship, with the decline in costs and expenses, Snap's operating losses are also narrowing, Snap's financial state is facing good development, if these positive trends can continue, I believe it will give investors more confidence.
Snap is investing in content. In its release management, the company highlighted that users aged 25 and older spent more than 25% year-over-year on total time on shows and publisher content each day. Snap's original work "Breakwater" has a viewer of over 10 million. With new content, Bitmojis, clothing options, sharing, and original content, dynamic ad revenue tripled.
In addition, Snap is making a big bet on augmented reality experiences. Every day, 250 million Snapchatters use the community's AR features, a sizable portion of its 332 million DAUs. In the first quarter, Snap launched an upgrade to AR shopping, as well as community-generated AR experiences at local landmarks.
Meta has remained profitable, but has been declining for two consecutive quarters year-over-year. At the same time, Meta's operating margin has declined to some extent since the third quarter of last year. In the first quarter of the year, Meta's operating profit was US$8.524 billion, and its operating margin was only 31%, the lowest in recent quarters, and the main factor contributing to this result was the significant increase in costs and expenses.
In addition, betting on the metacosm is also squeezing Meta's profit margins. According to the financial report, Meta showed that the operating loss of the reality research room was as high as $2.96 billion in the first quarter. The second growth curve bet by Meta, in the short term, is more like a "gold-devouring beast", and the next 1-3 years is still in a state of investment, and it is difficult to see profits in three years.
Twitter has the possibility of being acquired and privatized by Musk, but in the end, there is still some uncertainty about whether Twitter can really be privatized, and Twitter's future fate is shaky. Twitter said thursday it would not provide forward guidance and would retract the goals and outlook it had previously provided. Before Musk proposed the acquisition, Twitter had committed to achieving three main goals by the end of 2023: more than $7.5 billion in annual revenue, 315 million daily active users, and doubling the speed of research and development of new technologies.
Finally, due to macroeconomic conditions and the conflict between Russia and Ukraine, the advertising business of the three companies and the international DAU have been affected to a certain extent, and at the same time, in addition to the user competition between the three, they are facing the pressure of TikTok user competition.
Snap became Facebook's biggest competitor in the race for younger users after investment bank Piper Sandler released a survey of 10,000 U.S. teens. The results show that Snap remains the favorite social media app for U.S. teens, used by 35 percent of respondents, up from 31 percent in the year-ago quarter. According to data released by Snap, Snapchat's core users are in the 18-24 age group, accounting for 36% of the total users, and users under the age of 35 account for 85% of the total users.
The rapid development of TikTok can be said to have brought great impact to Snap, Twitter, FB and other platforms, of which the most active areas of TikTok users are in the Americas, Southeast Asia and the Middle East, of which the number of monthly active users in the Americas is close to 300 million, and the number of ASEAN users this month exceeded 240 million!
In addition, Meta faces more regulatory risks than Snap.
On March 24, the European Union announced the Digital Markets Act (DMA), which aims to regulate the business practices and market dominance of apple, Google, Meta, Amazon and Microsoft in Europe. Once silicon valley giants violate the DMA, they will face fines of up to 10% of their global annual turnover in the previous fiscal year, as well as fines of up to 20% for re-offending, and even risk being split.
Then, on April 23, the European Union agreed on a broad range of provisions for the Digital Services Act (DSA). The bill would force tech companies to take greater responsibility for content that appears on their platforms, including faster removal of illegal content and merchandise, explaining to users and outside researchers how their algorithms work, and taking stricter action against the spread of disinformation. Failure to comply with the regulations will result in fines of up to 6% of their annual turnover.
Both bills, once in force, will have an impact on Meta's advertising business.
In comparison, Snap's innovative ability has been running in front of FB and Twitter, and now the three are invariably targeting social e-commerce, who can go further in social e-commerce, it remains to be seen, let's wait and see.