News: Snapchat Rides AR Ads to Boost in Revenue Despite Redesign Hiccups

During Snap Inc.'s quarterly earnings report, released on Tuesday, the company disclosed that it snagged a revenue total of $230.8 million for the first quarter of 2018, an increase of 54% compared to last year, largely fueled by its augmented reality offerings and other advertising products.

While Snapchat faced a backlash as a result of its app redesign, the company also saw daily active users rise to 191 million for the quarter, a 15% increase compared to the same period in 2017.

During the earnings webcast, company founder and CEO Evan Spiegel addressed the controversy about the mobile app's redesign, its impact on the business, and its plan to optimize the design before reviewing the progress of its augmented reality platform. He specifically touched on the adoption of and upgrades to its Lens Studio creation platform and its Snappables Lenses for shared AR experiences and gaming.

"We expanded our augmented reality platform and offerings significantly this quarter. Lens Studio has seen incredible adoption. Over 200 of the Lenses created by our community were viewed over a million times in the few months since launch," said Spiegel, in prepared remarks issued ahead of the earnings webcast. "Our community has used these tools in ways we would have never imagined, and they have inspired us to invest more in empowering their creativity."

Snapchat's redesign, along with a change in its ad buy model, impacted the overall demand for ads on Snapchat. However, the total number of Lenses sold still increased 16% year-over-year.

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Imran Khan, Snap Inc.'s chief strategy officer, also emphasized the introduction of new e-commerce tools for augmented reality experiences as part of its enhanced ad product suite.

"We're also continuing to evolve our formats, and I'm really excited about our recent launch of shoppable augmented reality," said Khan. "Since bringing Lenses to market in 2015, we have seen this product drive tons of engagement and even create pop culture moments... As we scale adoption of this product, we are confident that it will help accelerate the growth of our Lens business as well."

During the question and answer session, the company noted that self-service tools like Lens Studio will be an area of focus for growing its overall advertising business.

"At the end of the day, we are transitioning, right now, to the creative tools business," said Drew Vollero, Snap Inc.'s chief financial officer. "We really are focused on being the value leader in the advertising platform."

From new Lenses and app features to its creative suite and advertising tools, it's clear that the company intends to lean even more heavily on AR for 2018 and likely beyond.