Snap continues to solidify its leading position in consumer AR. After announcing several milestones at its recent Lens Fest, including new usage figures, its Q4 earnings last week signaled continued momentum. In fact, AR was a bright spot in a record-breaking quarter.

Among other lens-based figures paraded out, 200 million+ Snapchat users engaged with AR daily, and total daily lens interactions have reached a whopping 6 billion. These engagement metrics make Snap the consumer AR leader, which drives its ongoing investment in Lens Studio.

Panning back to overall results, Snap brought in $1.3 billion in Q4 revenue, up 42 percent year-over-year. It reached 319 million daily active users, up 20 percent year-over-year. Most of all, Q4 marks its first quarter of positive net income and first full-year of positive operating cash flow.

Back to AR-specific milestones, there were several peppered throughout Snap’s earnings call. In fact, one could have made a drinking game out of “AR” or “Lens” mentions. Instead, we’ve fished out the more notable AR-related comments for this week’s XR Talks. See the breakdown below.

Snap Lens Fest: the Data Dive

Highlight Reel

Diving into the earnings call, the following were some of the choice quotes in the AR highlight reel.

CEO Evan Spiegel

“We grew our community, expanded our product offerings, and demonstrated the power of our augmented reality platform, both inside and outside of the Snapchat application.”

“Achieving positive free cash flow for the full year is an important milestone, as we are increasingly able to self-fund our investments in the future which positions us well to accelerate our vision for computing overlaid on the world through augmented reality.”

“Over 200 million people engage with augmented reality on Snapchat every day, and our community now plays with AR Lenses an average of more than 6 billion times per day. This momentum and the creative energy of the Snapchat community makes us incredibly excited about the future of augmented reality.”

“Our desire to build a better way of communicating visually through our camera has evolved into a leading platform for augmented reality. Our AR products and services are driving major impact at scale today, as Snapchatters use our services to shop, play, learn, explore, and entertain themselves.”

“In addition to the momentum with augmented reality on Snapchat, we are very excited by the growing demand from businesses, who want to bring Snap’s AR capabilities into their own apps and websites. We are meeting this growing demand through Camera Kit, which enables partners to easily integrate our AR technology and creator ecosystem in ways that meet their business objectives.”

“This quarter, we made significant progress with our Spectacles AR glasses, the fourth generation of a product line that we first introduced more than five years ago as a fun hands-free camera, designed to help capture your perspective while staying in the moment.”

“Hundreds of creators from 30 countries have now developed AR Lenses for Spectacles, overlaying computing on the world in an immersive and interactive way.”

“We created Spotlight to amplify the best of Snapchat and today over 65% of Spotlight submissions used one of Snapchat’s AR Lenses or creative tools.”

“Given the enormity of the opportunity in front of us, both in terms of the Snapchat application, as well as our augmented reality platform, 2022 will be a significant investment year for us as we work to accelerate our roadmap and deliver against our long-term vision of computing overlaid on the world.”

“A lot of our investments in the near and medium term are really around smartphone augmented reality because we just see such a massive opportunity there. And then looking a little bit further out, we’re definitely excited about the evolution of our Lens Studio developer tools and how that will support augmented reality on our Spectacles glasses in the future.”

“We released our first version of stand-alone AR glasses, last year, and we are continuing to build on that and evolve that platform. So, a lot to do on smartphone AR today in the near and medium term and then, of course, building to the long-term future of computing overlaid on the world.”

AR and Shopping Collide, Part I: Snap

Chief Business Officer, Jeremi Gorman

“We remain focused on our many opportunities to support our community and advertising partners, which we believe will be driven by three key priorities. First, driving ROI through optimization and measurement; second, investing in our sales and marketing functions by continuing to train, hire and build for scale; third, building innovative ad experiences around video and augmented reality.”

Augmented reality represents one of our most exciting long-term revenue opportunities. AR is unique, in that it is a fully immersive and interactive experience that delivers a measurable and repeatable return on investment for advertisers.”

“In Q4, we saw many advertisers increase their investments into AR advertising by leveraging our GBB Pixel purchase optimization for AR to bring unique experiences to Snapchatters, spanning verticals like makeup, retail, streaming, food delivery, technology, and e-commerce. We’ve invested heavily into building tools and capabilities to make it easier for advertisers to create, manage and deploy their AR experiences.”

“Our focus is to reduce the friction in creating and distributing AR experiences on and off Snapchat. After a successful beta program, last week, we fully rolled out our new catalog-powered Shopping Lenses, a completely new format, built to enable shopping through the use of augmented reality. Each Lens features a product card, where Snapchatters are able to see real-time information about a product name, price, and description. It also gives product-level insights into the performance of specific SKUs, allowing much richer feedback for the advertiser.”

“This supports our priority of driving ROI for advertising partners, as it gives them much richer signals for delivery and optimization….More early adopters are seeing Lenses drive significant increases in return on ad spend and conversion with this new format, and we’re excited to invest in this for 2022.”

“We have a large and engaged audience, and we remain focused on supporting our advertising partners by driving ROI through optimization and measurement, investing in our sales and marketing functions, and building innovative ad experiences around video and augmented reality.”

“We certainly believe that the camera and augmented reality represent our most exciting long-term revenue opportunity. And we are seeing that with brands, they’re starting to build ways on AR strategies for their businesses, and we are delivering results against that.”

“I think the great thing about augmented reality is that it’s a fully immersive experience that Snapchatters choose to engage with versus something that’s passive or served to them, and it’s now delivering a return on investments for businesses that’s both measurable and repeatable […] That’s something that’s incredibly important for Direct Response advertisers. And that is encouraging more and more businesses to invest in augmented reality.”

“When we initially launched AR for advertisers, it was kind of seen as this next shiny thing, a big brand moment, something that was a little bit more fun in their reference. But over time, we’ve been evolving the way that businesses think about it as more than just an ad format, but an experience that brands can build to grow their businesses.”

“We’ve invested really heavily into building the tools and capabilities to make it easier to create augmented reality, which then allows it to be a part of people always on ecosystems, to manage those, deploy their AR experiences.”

“When advertisers start to see results like that, you can imagine it is highly retentive and look-alike advertisers want to start doing a lot of the same work, so that they can get cost per try-on down, utilizing augmented reality.”

“A larger shift that we’re seeing, with AR transforming e-commerce. And e-commerce is, obviously, a secular trend that we expect to continue to grow, and we will grow right alongside it with AR […] And we’re really excited about the future of augmented reality as a product, particularly as it delivers results for incredible advertisers with great measurement solutions.”

CFO Derek Andersen

“We’re very excited about the future of augmented reality, where we’re investing a lot of our time. And that’s really where a lot of our growth over the longer term is unconstrained, in terms of our innovation, as we’re building out new products like Spectacles and continuing to evolve our AR platform.”

How is Snap Evolving as an AR Platform?

Growth Engine

One thing to underscore from all of the above is Snap’s continued acknowledgement that AR has a big hand in driving revenue growth. It’s experienced the sequence of AR investment, user engagement and ultimately ad dollars. Seeing those results drives it to continue doubling down.

Some of the earnings emphasis was also on Snap’s developer community, which continues to be its lens growth engine. Making Lens Studio more attractive for creators at all skill ranges is correspondingly a guiding principle for Snapchat, seen most recently at its May Partner Summit.

As we’ve examined, this is all key to Snap’s AR virtuous cycle. Robust lens libraries attract users and boost engagement. A growing audience then attracts more lens developers which further expand the library and, in turn, more users. All of the above attracts the real endgame: advertisers.

If Snap’s AR momentum is any indication, we’ll continue to see Lens Studio evolve rapidly. Snap is driven to propel AR as an increasingly-influential component of its revenue model. It’s internalized the feedback loop of AR-driven financial success and is living up to its “camera-company” ethos.

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